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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 10-Q


þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2017March 31, 2020
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 1-2958


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HUBBELL INCORPORATEDINCORPORATED
(Exact name of registrant as specified in its charter)
 
STATE OF CONNECTICUTConnecticut06-0397030
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
40 Waterview Drive
Shelton,CT06484
(Address of principal executive offices)(Zip Code)
(475)882-4000
(Registrant’s telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report.)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock - par value $0.01 per shareHUBBNew York Stock Exchange
Indicate by check markYESNO
•
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
þ
Yes
¨
☑		No☐
•
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
þ
Yes
¨
☑		No☐
•
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþ
☑
Accelerated filer
Accelerated☐
Non-accelerated filer ¨
Non-accelerated filer
(Do not check if a smaller
reporting company) ¨
☐
Smaller reporting company¨
☐
Emerging growth company¨
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ¨☐
•
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨Yesþ☐No☑
 
The number of shares outstanding of Hubbell Common Stockcommon stock as of October 20, 2017April 29, 2020 was 54,706,039.54,201,073.


HUBBELL INCORPORATED-Form 10-Q    1
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Index


Table of contents 
   
PART I
 
3
   
ITEM 1
Financial Statements (unaudited)
 
 
Condensed Consolidated Statements of Income
3
 
Condensed Consolidated Statements of Comprehensive Income
4
 
Condensed Consolidated Balance Sheets
5
 
Condensed Consolidated Statements of Cash Flows
6
 
Notes to Condensed Consolidated Financial Statements
7
ITEM 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2251
ITEM 3
Quantitative and Qualitative Disclosures About Market Risk
3364
ITEM 4
Controls and Procedures
3364
   
PART II
 
3375
   
ITEM 1A
Risk Factors
3375
ITEM 2
Unregistered Sales of Equity Securities and Use of Proceeds
3385
ITEM 6
Exhibits
3396
 
Signatures
3407




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PART IFINANCIAL INFORMATION


ITEM 1Financial Statements


Condensed Consolidated Statements of Income (unaudited)

Three Months Ended September 30,Nine Months Ended September 30,Three Months Ended March 31,
(in millions, except per share amounts)2017
2016
2017
2016
2020
2019
Net sales$950.5
$907.4
$2,751.1
$2,651.0
$1,090.3
$1,087.3
Cost of goods sold643.6
618.7
1,887.7
1,808.9
776.8
780.0
Gross profit306.9
288.7
863.4
842.1
313.5
307.3
Selling & administrative expenses160.5
152.7
482.3
472.1
194.7
186.4
Operating income146.4
136.0
381.1
370.0
118.8
120.9
Interest expense, net(11.6)(11.6)(34.3)(31.9)(15.1)(17.5)
Loss on extinguishment of debt(10.1)—
(10.1)—
Other (expense) income, net(1.1)(0.3)(5.5)(5.6)
Other expense, net(3.8)(5.4)
Total other expense(22.8)(11.9)(49.9)(37.5)(18.9)(22.9)
Income before income taxes123.6
124.1
331.2
332.5
99.9
98.0
Provision for income taxes40.8
36.0
103.7
100.4
24.2
24.2
Net income82.8
88.1
227.5
232.1
75.7
73.8
Less: Net income attributable to noncontrolling interest2.0
1.4
4.8
3.5
0.7
1.5
Net income attributable to Hubbell$80.8
$86.7
$222.7
$228.6
Net income attributable to Hubbell Incorporated$75.0
$72.3
Earnings per share 
 
 
 
 
 
Basic$1.47
$1.56
$4.05
$4.10
$1.38
$1.32
Diluted$1.47
$1.56
$4.02
$4.08
$1.37
$1.32
Cash dividends per common share$0.70
$0.63
$2.10
$1.89
$0.91
$0.84
See notes to unaudited condensed consolidated financial statements.Condensed Consolidated Financial Statements.


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Condensed Consolidated Statements of Comprehensive Income (unaudited)
 
 Three Months Ended September 30,
(in millions)2017
2016
Net income$82.8
$88.1
Other comprehensive income (loss): 
 
Foreign currency translation adjustments16.1
(2.6)
Pension and post-retirement benefit plans’ prior service costs, net actuarial gains and other pension-related, net of taxes of ($0.9) and ($1.1)1.8
2.1
Unrealized gain (loss) on investments, net of taxes of ($0.3) and $0.10.5
(0.2)
Unrealized gain (loss) on cash flow hedges, net of taxes of $0.5 and ($0.2)(1.0)0.6
Other comprehensive income (loss)17.4
(0.1)
Total comprehensive income100.2
88.0
Less: Comprehensive income attributable to noncontrolling interest2.0
1.4
Comprehensive income attributable to Hubbell$98.2
$86.6
 Three Months Ended March 31,
(in millions)2020
2019
Net income$75.7
$73.8
Other comprehensive (loss) income: 
 
Foreign currency translation adjustments(25.6)7.1
Defined benefit pension and post-retirement plans, net of taxes of ($0.6) and ($0.5)1.7
1.5
Available-for-sale investments, net of taxes of $0.0 and ($0.1)(0.1)0.3
Unrealized gain (loss) on cash flow hedges, net of taxes of ($0.6) and $0.21.6
(0.6)
Other comprehensive (loss) income(22.4)8.3
Total comprehensive income53.3
82.1
Less: Comprehensive income attributable to noncontrolling interest0.7
1.5
Comprehensive income attributable to Hubbell Incorporated$52.6
$80.6
See notes to unaudited condensed consolidated financial statements.Condensed Consolidated Financial Statements.





   
 Nine Months Ended September 30,
(in millions)2017
2016
Net income$227.5
$232.1
Other comprehensive income (loss):  
Foreign currency translation adjustments35.3
(15.7)
Pension and post retirement benefit plans’ prior service costs, net actuarial gains and other pension-related, net of taxes of ($2.8) and ($3.6)5.5
6.2
Unrealized gain on investments, net of taxes of ($0.7) and ($0.1)1.0
0.3
Unrealized loss on cash flow hedges, net of taxes of $0.9 and $0.8(1.9)(1.9)
Other comprehensive income (loss)39.9
(11.1)
Total comprehensive income267.4
221.0
Less: Comprehensive income attributable to noncontrolling interest4.8
3.5
Comprehensive income attributable to Hubbell$262.6
$217.5
See notes to unaudited condensed consolidated financial statements.



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Condensed Consolidated Balance Sheets (unaudited)
 
(in millions)September 30, 2017
December 31, 2016
March 31, 2020
December 31, 2019
ASSETS 
 
 
 
Current Assets 
 
 
 
Cash and cash equivalents$386.4
$437.6
$300.0
$182.0
Short-term investments13.6
11.2
13.5
14.2
Accounts receivable, net615.1
530.0
Account receivable (net of allowances of $13.6 and $7.7)707.7
683.0
Inventories, net623.6
532.4
595.7
633.0
Other current assets46.3
40.1
58.1
62.0
Total Current Assets1,685.0
1,551.3
1,675.0
1,574.2
Property, Plant, and Equipment, net449.1
439.8
495.5
505.2
Other Assets 
 
 
 
Investments56.5
56.4
53.2
55.7
Goodwill1,063.5
991.0
1,807.1
1,811.8
Intangible assets, net437.1
431.5
Other intangible assets, net758.8
781.5
Other long-term assets52.0
55.0
169.5
174.6
TOTAL ASSETS$3,743.2
$3,525.0
$4,959.1
$4,903.0
LIABILITIES AND EQUITY 
 
 
 
Current Liabilities 
 
 
 
Short-term debt$93.8
$3.2
Short-term debt and current portion of long-term debt$106.7
$65.4
Accounts payable349.4
291.6
358.4
347.7
Accrued salaries, wages and employee benefits79.3
82.8
65.9
101.5
Accrued insurance59.8
55.8
78.0
68.1
Other accrued liabilities158.3
156.2
232.3
262.2
Total Current Liabilities740.6
589.6
841.3
844.9
Long-Term Debt986.7
990.5
1,597.3
1,506.0
Other Non-Current Liabilities348.2
341.7
592.0
591.6
TOTAL LIABILITIES2,075.5
1,921.8
3,030.6
2,942.5
Total Hubbell Shareholders’ Equity1,656.0
1,592.8
Hubbell Incorporated Shareholders’ Equity1,914.9
1,947.1
Noncontrolling interest11.7
10.4
13.6
13.4
TOTAL EQUITY1,667.7
1,603.2
Total Equity1,928.5
1,960.5
TOTAL LIABILITIES AND EQUITY$3,743.2
$3,525.0
$4,959.1
$4,903.0
See notes to unaudited condensed consolidated financial statements.Condensed Consolidated Financial Statements.


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Condensed Consolidated Statements of Cash Flows (unaudited)
    
Nine Months Ended September 30,Three Months Ended March 31,
(in millions)2017201620202019
Cash Flows from Operating Activities 
 
 
 
Net income$227.5
$232.1
$75.7
$73.8
Adjustments to reconcile net income to net cash provided by operating activities: 
 
  
Depreciation and amortization76.0
68.6
38.9
36.6
Deferred income taxes4.2
4.3
1.6
3.0
Stock-based compensation11.9
13.1
11.6
4.1
Loss on extinguishment of debt10.1
—
Provision for bad debt expense5.3
0.8
Changes in assets and liabilities, excluding effects of acquisitions: 
 
 
 
Increase in accounts receivable, net(73.0)(73.8)
(Increase) decrease in inventories, net(79.2)8.6
Increase in current liabilities65.6
0.8
(Increase) decrease in accounts receivable, net(36.8)9.3
Decrease (increase) in inventories, net32.7
(10.7)
Increase in accounts payable15.2
12.6
Decrease in current liabilities(48.8)(61.1)
Changes in other assets and liabilities, net(12.3)8.8
7.5
9.2
Contribution to qualified defined benefit pension plans(1.3)(1.4)(0.1)(0.1)
Other, net(0.9)8.1
5.6
0.6
Net cash provided by operating activities228.6
269.2
108.4
78.1
Cash Flows from Investing Activities 
 
 
 
Capital expenditures(53.2)(45.8)(17.8)(23.3)
Acquisition of businesses, net of cash acquired(110.3)(172.5)(2.1)—
Purchases of available-for-sale investments(15.1)(13.1)(4.7)(1.0)
Proceeds from available-for-sale investments14.1
8.8
6.5
2.7
Other, net2.9
3.3
2.5
1.5
Net cash used in investing activities(161.6)(219.3)(15.6)(20.1)
Cash Flows from Financing Activities 
 
  
Long-term debt borrowings, net(2.4)397.0
Long-term debt borrowings100.0
—
Long-term debt repayments(6.3)(6.3)
Short-term debt borrowings, net90.7
(47.7)38.1
21.2
Payment of dividends(115.5)(105.1)
Payment of dividends to shareholders(49.5)(45.8)
Payment of dividends to noncontrolling interest(3.5)(2.8)(0.6)(1.0)
Repurchase of common shares(92.6)(246.8)
Make whole payment for retirement of long term debt(9.9)—
Debt issuance costs(3.0)(3.6)
Repurchase of common stock(41.3)(10.0)
Other, net(3.7)(5.3)(4.7)(1.8)
Net cash used by financing activities(139.9)(14.3)
Effect of foreign currency exchange rate changes on cash and cash equivalents21.7
(14.6)
(Decrease) increase in cash and cash equivalents(51.2)21.0
Net cash (used) provided by financing activities35.7
(43.7)
Effect of exchange rate changes on cash and cash equivalents(10.5)2.0
Increase in cash and cash equivalents118.0
16.3
Cash and cash equivalents    
Beginning of period437.6
343.5
182.0
189.0
End of period$386.4
$364.5
$300.0
$205.3
See notes to unaudited condensed consolidated financial statements.Condensed Consolidated Financial Statements.


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Notes to Condensed Consolidated Financial Statements (unaudited)


NOTE 1 Basis of Presentation
 
 
The accompanying unaudited condensed consolidated financial statementsCondensed Consolidated Financial Statements of Hubbell Incorporated (“Hubbell”, the “Company”, “registrant”, “we”, “our” or “us”, which references shall include its divisions and subsidiaries) have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“U.S.”) GAAP for completeaudited financial statements. In the opinion of management, all adjustments consisting only of normal recurring adjustments considered necessary for a fair statement of the results of the periods presented have been included. Operating results for the ninethree months ended September 30, 2017March 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2017.2020. In the first quarter of 2020 our former Power segment was re-named Hubbell Utility Solutions ("Utility Solutions") to reflect the depth and breadth of our industry-leading offering for electric, water, gas and telecom utilities ranging from a wide variety of critical infrastructure components to full-scale smart grid solutions.
 
The balance sheet at December 31, 20162019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the U.S. GAAP for complete financial statements.


For further information, refer to the consolidated financial statements and footnotes thereto included in the Hubbell Incorporated Annual Report on Form 10-K for the year ended December 31, 2016.2019.
Recent
During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic has significantly impacted global economic conditions and in the U.S., accelerated during the first half of March as federal, state and local governments reacted to the public health crisis with mitigation measures, creating significant uncertainties in the U.S. and global economies. The extent to which the coronavirus pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict and which may cause the actual results to differ from the estimates and assumptions we are required to make in the preparation of financial statements according to GAAP.

Recently Adopted Accounting Pronouncements


In March 2017,June 2016, the Financial Accounting Standards Board ("FASB")FASB issued an Accounting Standards Update (ASU 2017-07)2016-13), "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASC 326), which amends the presentationimpairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of net periodic pension cost and net periodic post-retirement benefit cost. The new guidance requires the service cost component of net periodic pension and post-retirement benefit costs to be reportedfinancial instruments, including trade receivables. This may result in the sameearlier recognition of allowances for losses. The Company adopted the requirements of the new standard in the first quarter of 2020. The adoption of this guidance and recognition of a loss allowance at an amount equal to lifetime expected credit losses for trade receivables resulted in a $1.0 million cumulative-effect adjustment to retained earnings, net of tax.

In August 2018, the FASB issued an Accounting Standards Update (ASU 2018-15) "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract", which clarifies the accounting for implementation costs in cloud computing arrangements. The Company adopted the standard prospectively during the first quarter of 2020 with no material impact to the consolidated financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued an Accounting Standards Update (ASU 2019-12) "Simplifying the Accounting for Income Taxes", which simplifies the accounting for income statement line item as other employee compensation costs,taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the other non-service componentscurrent guidance to be reported outside of operating income. This new guidancepromote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2017 and2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. Upon adoption, the Company expects 2016 Operating income to increase by $12.0 million and 2017 Operating income to increase by an estimated $15.0 million, due to the removal of the non-service components of net periodic pension and post-retirement benefit costs. The Company expects a corresponding increase to Other expense, net, resulting in zero impact to net income in both periods.

In August 2016, the FASB issued an Accounting Standards Update (ASU 2016-15) to provide additional guidance and reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The Company adopted the standard during the third quarter of 2017, and the comparable period within the Condensed Consolidated Statements of Cash Flows has been recast to reflect adoption. The adoption did not have a material impact on the Company's financial statements.

In March 2016, the FASB issued an Accounting Standards Update (ASU 2016-09) relating to the accounting for share-based payments. The new guidance requires all income tax effects of share-based awards to be recognized in the income statement when the awards vest or are settled, and allows companies an additional election in the method to estimate forfeitures of share-based payments. The new guidance also requires excess tax benefits to be classified as an operating activity in the statement of cash flows, and cash paid to a tax authority when shares are withheld to satisfy the employer's statutory income tax withholdings be classified as a financing activity. The Company adopted the standard on January 1, 2017. The Company elected to adopt all provisions impacting the Condensed Consolidated Statements of Cash Flows retrospectively; as such, the comparable period within the Condensed Consolidated Statements of Cash Flows has been recast to reflect the adoption. The income statement provisions of the new guidance have been adopted prospectively. There is no change to the Company's accounting policy with respect to estimation of forfeitures. The adoption did not have a material impact on the Company's financial statements.

In February 2016, the FASB issued an Accounting Standards Update (ASU 2016-02) related to the accounting and financial statement presentation for leases. This new guidance will require a lessee to recognize a right-to-use asset and a lease liability for both financing and operating leases, with a policy election permitting an exception to this guidance for leases with a term of twelve months or less. For financing leases, the lessee will recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee will recognize a straight-line lease expense. This guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The new standard must be adopted using a modified retrospective transition at the beginning of the earliest comparative period presented. The Company expects to recognize less than $100 million of right-of-use assets and corresponding lease liabilities on the balance sheet upon adoption. The Company does not expect the adoption will have a material impact to the Statement of Income or Cash Flows.

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In May 2014, the FASB issued an Accounting Standards Update (ASU 2014-09) related to new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. According to the new guidance, an entity will apply a principles-based five step model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. Subsequently, the FASB has issued amendments to certain aspects of the guidance including the effective date. The Company expects to adopt the guidance in the first quarter of 2018 using the modified-retrospective method.

The Company has a project team that is currently reviewing contract terms and assessing the impact of adopting this standard on its financial statements.

In March 2020, FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the standard, including impactsEffects of Reference Rate Reform on Financial Reporting", which provides optional expedients and exceptions for applying generally accepted accounting principles to the Company's processes, controlscontracts, hedging relationships, and financial statement disclosures.other transactions affected by reference rate reform if certain criteria are met. The implementation team reports the progressamendments are effective for all entities beginning on March 12, 2020, and findings of its review to Management on a periodic basis. Based on the reviews and assessments performed to date, the Company expectsmay elect to apply the pattern of revenue recognition for the vast majority of its businesses to be unchanged, and that upon adoption revenue will generally continue to be recognized at a single point in time when control is transferred to the customer.amendments prospectively through December 31, 2022. The Company anticipates impacts tois currently assessing the impact of adopting this standard on its financial statements primarily related to balance sheet classification, including of amounts associated with sales returns reserves. In the fourth quarter of 2017, the Company expects to continue to evaluate and update controls and policies affected by the new standard as necessary and to identify and gather the data necessary for new disclosure requirements. Additional updates will be provided in future filings, as appropriate.statements.


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NOTE 2 Business Acquisitions Revenue
 
 
InThe Company recognizes revenue when performance obligations identified under the first quarterterms of 2017,contracts with its customers are satisfied, which generally occurs, for products, upon the Company completed two acquisitions for $9.5 million, nettransfer of cash received, resultingcontrol in accordance with the contractual terms and conditions of the sale. The majority of the Company’s revenue associated with products is recognized at a point in time when the product is shipped to the customer, with a relatively small amount of transactions in the recognitionUtility Solutions segment recognized upon delivery of intangible assetsthe product at the destination. Revenue from service contracts and post-shipment performance obligations are approximately 3 percent of $3.4 milliontotal annual consolidated net revenue and goodwillthose service contracts and post-shipment obligations are primarily within the Utility Solutions segment. Revenue from service contracts and post-shipment performance obligations is recognized when or as those obligations are satisfied. The Company primarily offers assurance-type standard warranties that do not represent separate performance obligations and on occasion will separately offer and price extended warranties that are separate performance obligations for which the associated revenue is recognized over-time based on the extended warranty period. The Company records amounts billed to customers for reimbursement of $4.5 million. The $3.4 million of intangible assets consists primarily of customer relationshipsshipping and trade names that will be amortizedhandling costs within revenue. Shipping and handling costs associated with outbound freight after control over a weighted average period of approximately 13 years. These acquisitions have been addedproduct has transferred to the Power segment and $2.7 million of the goodwill related to one of the acquisitions is currently expected to be deductible for tax purposes.

In the second quarter of 2017, the Company acquired all of the issued and outstanding limited liability company interests in iDevices, LLC ("iDevices") for $59.2 million. iDevices is a developer with embedded firmware and application development expertise with custom-built Internet of Things ("IoT") Cloud infrastructure. The iDevices acquisition adds capabilities and expertise in IoT technology that is required to provide Tier 3 energy management solutions via connected hardware with a software front-end. iDevices is reported in the Electrical segment. We have recognized intangible assets of $9.6 million and goodwill of $45.3 million as a result of this acquisition. The $9.6 million of intangible assets consists primarily of developed technology, customer relationships and trade names and will be amortized over a weighted average period of approximately 12 years. All of the goodwill is expected to be deductible for tax purposes.

In the second quarter of 2017, the Company also acquired substantially all of the assets of Advance Engineering Corporation and related companies (collectively "AEC") for $31.6 million. AEC is a gas components manufacturer that complements the Company's existing business in the natural gas distribution vertical. AEC joins the Company's recent acquisitions of GasBreaker and Lyall to bolster its main-to-meter mechanical solutions in this area. AEC is reported in the Electrical segment. We have recognized intangible assets of $16.8 million and goodwill of $12.1 million as a result of this acquisition. The $16.8 million of intangible assets consists primarily of customer relationships and trade names and will be amortized over a weighted average period of approximately 18 years. All of the goodwill is expected to be deductible for tax purposes.
These business acquisitions have beenare accounted for as business combinationsfulfillment costs and have resultedare included in cost of goods sold. Sales taxes and other usage-based taxes are excluded from revenue.

Within the Electrical segment, certain businesses require a portion of the transaction price to be paid in advance of transfer of control. Advance payments are not considered a significant financing component as they are received less than one year before the related performance obligations are satisfied. In addition, in the recognition of goodwill. The goodwill relates to a number of factors built intoUtility Solutions segment, certain businesses offer annual maintenance service contracts that require payment at the purchase price, including the future earnings and cash flow potentialbeginning of the businessescontract period. These payments are treated as well asa contract liability and are classified in Other accrued liabilities in the complementary strategic fit and resulting synergies they bringCondensed Consolidated Balance Sheets. Once control transfers to the Company’s existing operations.customer and the Company meets the revenue recognition criteria, the deferred revenue is recognized in the Condensed Consolidated Statements of Income. The deferred revenue relating to the annual maintenance service contracts is recognized in the Condensed Consolidated Statements of Income on a straight-line basis over the expected term of the contract.


The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed at the dates of acquisition related to these transactions (in millions):presents disaggregated revenue by business group:
Tangible assets acquired$21.3
Intangible assets29.8
Goodwill61.9
Net deferred taxes(0.2)
Other liabilities assumed(12.5)
TOTAL CONSIDERATION, NET OF CASH RECEIVED$100.3
 Three Months Ended March 31,
in millions20202019
Net sales  
   Commercial and Industrial$213.0
$221.3
   Construction and Energy191.4
188.4
   Lighting201.7
220.5
Total Electrical$606.1
$630.2
   Power Systems326.3
291.9
   Aclara157.9
165.2
Total Utility Solutions$484.2
$457.1
TOTAL$1,090.3
$1,087.3

The allocationfollowing table presents disaggregated revenue by geographic location (on a geographic basis, the Company defines "international" as operations based outside of purchase price for these acquisitions is based on preliminary estimatesthe United States and assumptions, and is subject to revision based on final information received and other analysis that support the underlying estimates. We expect to complete our purchase accounting within the measurement period for each acquisition.its possessions):



 Three Months Ended March 31,
in millions20202019
Net sales  
   United States$549.7
$565.7
   International56.4
64.5
Total Electrical$606.1
$630.2
   United States455.5
431.2
   International28.7
25.9
Total Utility Solutions$484.2
$457.1
TOTAL$1,090.3
$1,087.3


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Contract Balances

Our contract liabilities consist of advance payments for products as well as deferred revenue on service obligations and extended warranties. The current portion of deferred revenue is included in Other accrued liabilities and the non-current portion of deferred revenue is included in Other non-current liabilities in the Condensed Consolidated Financial Statements includeBalance Sheets.

Contract liabilities were $34.7 million as of March 31, 2020 compared to $31.0 million as of December 31, 2019. The $3.7 million increase in our contract liabilities balance was primarily due to a $11.0 million net increase in current year deferrals primarily due to timing of advance payments on certain orders, partially offset by the resultsrecognition of operations$7.3 million in revenue related to amounts that were recorded in contract liabilities at January 1, 2020. The Company has an immaterial amount of contract assets relating to performance obligations satisfied prior to payment that is recorded in Other long-term assets in the Condensed Consolidated Balance Sheets. Impairment losses recognized on our receivables and contract assets were immaterial for the three months ended March 31, 2020.

Unsatisfied Performance Obligations

As of March 31, 2020, the Company had approximately $345 million of unsatisfied performance obligations for contracts with an original expected length of greater than one year, primarily relating to long-term contracts of the entities acquired fromUtility Solutions segment to deliver and install meters, metering communications and grid monitoring sensor technology. The Company expects that a majority of the date of acquisition. Net salesunsatisfied performance obligations will be completed and earnings related to these acquisitions forrecognized over the nine months ended September 30, 2017 were not significant to the consolidated results. Pro forma information related to these acquisitions has not been included because the impact to the Company’s consolidated results of operations was not material.next 3 years.


Cash used for the acquisition of businesses, net of cash acquired as reported in the Consolidated Statement of Cash Flows for the nine months ended September 30, 2017, is$110.3 million and includes payments associated with a 2016 acquisition for which the purchase price is due to be settled in installments.

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NOTE 3 Segment Information
 


The Company's reporting segments consist of the Electrical segment and the Utility Solutions segment. In the first quarter of 2020 our former Power segment. segment was re-named Utility Solutions to reflect the depth and breadth of our industry-leading offering for electric, water, gas and telecom utilities ranging from a wide variety of critical infrastructure components to full-scale smart grid solutions.

The Electrical segment is comprised ofcomprises businesses that sell stock and custom products including standard and special application wiring device products, rough-in electrical products, connector and grounding products, lightlighting fixtures and controls, components and assemblies for the natural gas distribution market as well asand other electrical equipment. The products are typically used in and around industrial, commercial and institutional facilities by electrical contractors, maintenance personnel, electricians, utilities, and telecommunications companies. In addition, certain of our businesses design and manufacture industrial controls and communication equipment, somesystems used in the non-residential and industrial markets. Many of which isthese products are designed such that itthey can also be used in harsh and hazardous locations where a potential for fire and explosion exists due to the presence of flammable gasses and vapors. Harsh and hazardous products are primarily used in the oil and gas (onshore and offshore) and mining industries. There are also a variety of lighting fixtures, wiring devices and electrical products that have residential and utility applications, including residential products with Internet-of-Things ("IoT") enabled technologies. These products are primarily sold through electrical and industrial distributors, home centers, retail and hardware outlets, lighting showrooms and residential product-oriented internet sites. Special application products are primarily sold through wholesale distributors to contractors, industrial customers and OEMs. The Electrical segment is comprised of three3 business groups, which have been aggregated as they have similar long-term economic characteristics, customers and distribution channels, among other factors.

The PowerUtility Solutions segment primarily serves the electric utility industryconsists of businesses that design and is comprised of a wide variety of electricalmanufacture various distribution, transmission, substation and substationtelecommunications products with high voltage applicationsprimarily used by the electrical, water, gas, and telecommunication utility industries. These offerings include advanced metering infrastructure, meter and edge devices, software and infrastructure services, which are primarily sold to the electrical, water, and gas utility industries. In addition, certain of these products are used in the civil construction, water utility, and transportation industries. Products are sold to distributors and directly to users such as well asutilities, telecommunication products. companies, pipeline and mining operations, industrial firms, construction and engineering firms.

The following table sets forth financial information by business segment (in millions):
 Net SalesOperating IncomeOperating Income as a % of Net Sales
 2020
2019
2020
2019
2020
2019
Three Months Ended March 31,  
  
  
Electrical$606.1
$630.2
$58.0
$68.6
9.6%10.9%
Utility Solutions484.2
457.1
60.8
52.3
12.5%11.4%
TOTAL$1,090.3
$1,087.3
$118.8
$120.9
10.9%11.1%

 Net SalesOperating IncomeOperating Income as a % of Net Sales
 2017
2016
2017
2016
2017
2016
Three Months Ended September 30,  
  
  
Electrical$654.0
$634.6
$85.6
$80.9
13.1%12.7%
Power296.5
272.8
60.8
55.1
20.5%20.2%
TOTAL$950.5
$907.4
$146.4
$136.0
15.4%15.0%
Nine Months Ended September 30,  
  
  
Electrical$1,897.9
$1,858.7
$206.6
$213.5
10.9%11.5%
Power853.2
792.3
174.5
156.5
20.5%19.8%
TOTAL$2,751.1
$2,651.0
$381.1
$370.0
13.9%14.0%




NOTE 4 Inventories, net
 
 
Inventories, net are comprisedconsists of the following (in millions):
 March 31, 2020
December 31, 2019
Raw material$222.4
$217.4
Work-in-process108.2
101.8
Finished goods355.1
403.6
Subtotal685.7
722.8
Excess of FIFO over LIFO cost basis(90.0)(89.8)
TOTAL$595.7
$633.0

 September 30, 2017
December 31, 2016
Raw material$188.4
$162.7
Work-in-process116.4
102.8
Finished goods379.7
327.9
 684.5
593.4
Excess of FIFO over LIFO cost basis(60.9)(61.0)
TOTAL$623.6
$532.4



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NOTE 5 Goodwill and Other Intangible Assets, net
 


Changes in the carrying values of goodwill for the ninethree months ended September 30, 2017,March 31, 2020, were as follows (in millions):
 Segment 
 Electrical
Utility Solutions
Total
BALANCE DECEMBER 31, 2019$727.7
$1,084.1
$1,811.8
Prior year acquisitions—
3.4
3.4
Foreign currency translation(4.4)(3.7)(8.1)
BALANCE MARCH 31, 2020$723.3
$1,083.8
$1,807.1
 Segment 
 Electrical
Power
Total
BALANCE DECEMBER 31, 2016$652.0
$339.0
$991.0
Current year acquisitions (Note 2 – Business Acquisitions)57.4
4.5
61.9
Foreign currency translation and prior year acquisitions7.6
3.0
10.6
BALANCE SEPTEMBER 30, 2017$717.0
$346.5
$1,063.5

 
InDuring the first quarter of 2017three months ended March 31, 2020, we completed two acquisitions that were addedrecognized an increase to the Power segment. Inconsideration paid in conjunction with our acquisition of Cantega Technologies Inc., including its wholly owned subsidiary Greenjacket Inc., and all of the second quarterissued and outstanding shares of 2017, we completedReliaguard Inc. (collectively "Cantega") as a result of the acquisitionscustomary net working capital provisions in the acquisition agreements. The increase in consideration paid of AEC and iDevices. The AEC and iDevices acquisitions were added to the Electrical segment. These acquisitions have been accounted for as business combinations and have$2.1 million resulted in the recognition of $61.9 million ofa corresponding increase to goodwill. See Note 2 – Business AcquisitionsThe goodwill is not deductible for additional information.tax purposes.


The carrying value of other intangible assets included in Intangible assets, net in the Condensed Consolidated Balance SheetSheets is as follows (in millions):
 March 31, 2020December 31, 2019
 Gross Amount
Accumulated
Amortization

Gross Amount
Accumulated
Amortization

Definite-lived: 
 
 
 
Patents, tradenames and trademarks$201.8
$(66.9)$202.7
$(65.0)
Customer relationships, developed technology and other856.8
(285.8)861.0
(270.8)
Total$1,058.6
$(352.7)$1,063.7
$(335.8)
Indefinite-lived: 
 
 
 
Tradenames and other52.9
—
53.6
—
TOTAL$1,111.5
$(352.7)$1,117.3
$(335.8)
 September 30, 2017December 31, 2016
 Gross Amount
Accumulated
Amortization

Gross Amount
Accumulated
Amortization

Definite-lived: 
 
 
 
Patents, tradenames and trademarks$151.1
$(49.1)$143.7
$(43.4)
Customer/agent relationships and other431.1
(150.1)405.9
(128.0)
Total$582.2
$(199.2)$549.6
$(171.4)
Indefinite-lived: 
 
 
 
Tradenames and other54.1
—
53.3
—
TOTAL$636.3
$(199.2)$602.9
$(171.4)

 
Amortization expense associated with definite-lived intangible assets was $26.4$19.1 million and $24.0$18.2 million for the ninethree months ended September 30, 2017March 31, 2020 and 2016,2019, respectively. Future amortization expense associated with these intangible assets is expectedestimated to be $8.0$54.8 million for the remainder of 2017, $32.7 million in 2018, $31.0 million in 2019, $31.3 million in 2020, $30.7$72.1 million in 2021, and $29.2$67.0 million in 2022.2022, $62.2 million in 2023, $56.8 million in 2024, and $52.3 million in 2025. The Company amortizes intangible assets with definite lives using either an accelerated method that reflects the pattern in which economic benefits of the intangible assets are consumed and results in higher amortization in the earlier years of the assets useful life, or using a straight line method. Approximately 75% of the gross value of definite-lived intangible assets follow an accelerated amortization method.

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NOTE 6 Other Accrued Liabilities
 


Other accrued liabilities are comprisedconsists of the following (in millions):
 March 31, 2020
December 31, 2019
Customer program incentives$28.7
$49.0
Accrued income taxes10.8
6.0
Contract liabilities - deferred revenue34.7
31.0
Customer refund liability18.9
19.0
Accrued warranties(1)
24.2
24.0
Current operating lease liabilities28.1
29.6
Other86.9
103.6
TOTAL$232.3
$262.2

 September 30, 2017
December 31, 2016
Customer program incentives$36.1
$41.2
Accrued income taxes10.8
8.4
Deferred revenue14.9
11.8
Other96.5
94.8
TOTAL$158.3
$156.2
(1) Refer to Note 21 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019 for additional information regarding warranties.



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NOTE 7 Other Non-Current Liabilities
 


Other non-current liabilities are comprisedconsists of the following (in millions):
 March 31, 2020
December 31, 2019
Pensions$196.2
$198.5
Other post-retirement benefits21.5
21.5
Deferred tax liabilities125.6
126.8
Accrued warranties long-term(1)
58.3
58.1
Non-current operating lease liabilities70.9
71.7
Other119.5
115.0
TOTAL$592.0
$591.6

 September 30, 2017
December 31, 2016
Pensions$209.6
$208.3
Other post-retirement benefits23.9
24.0
Deferred tax liabilities46.3
41.2
Other68.4
68.2
TOTAL$348.2
$341.7
(1) Refer to Note 21 - Guarantees, in the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2019 for additional information regarding warranties.



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NOTE 8 Total Equity
 


TotalA summary of changes in total equity for the three months ended March 31, 2020 and the three months ended March 31, 2019 is comprised of the followingprovided below (in millions, except per share amounts):
 September 30, 2017
December 31, 2016
Common stock, $.01 par value: 
 
Common Stock-- authorized 200.0 shares; issued and outstanding 54.7 and 55.5 shares$0.5
$0.6
Additional paid-in capital3.8
15.4
Retained earnings1,914.3
1,879.3
Accumulated other comprehensive loss: 
 
   Pension and post retirement benefit plan adjustment, net of tax(175.0)(180.5)
   Cumulative translation adjustment(85.5)(120.8)
   Unrealized gain on investment, net of tax(0.2)(1.2)
   Cash flow hedge (loss) gain, net of tax(1.9)—
Total Accumulated other comprehensive loss(262.6)(302.5)
Hubbell shareholders’ equity1,656.0
1,592.8
Noncontrolling interest11.7
10.4
TOTAL EQUITY$1,667.7
$1,603.2
 Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total Hubbell
Shareholders'
Equity
Non-
controlling
interest
BALANCE AT DECEMBER 31, 2019$0.6
$—
$2,279.4
$(332.9)$1,947.1
$13.4
Net income—
—
75.0
—
75.0
0.7
Other comprehensive loss—
—
—
(22.4)(22.4)—
Stock-based compensation—
11.6
—
—
11.6
—
Acquisition/surrender of common shares(1)
—
(10.4)(34.1)—
(44.5)—
Cash dividends declared ($0.91 per share)—
—
(49.7)—
(49.7)—
Dividends to noncontrolling interest—
—
—
—
—
(0.5)
Directors deferred compensation—
(1.2)—
—
(1.2)—
Cumulative effect from adoption of CECL accounting standard (Note1)—
—
(1.0)—
(1.0)—
BALANCE AT MARCH 31, 2020$0.6
$—
$2,269.6
$(355.3)$1,914.9
$13.6

 Common Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total Hubbell
Shareholders'
Equity
Non-
controlling
interest
BALANCE AT DECEMBER 31, 2018$0.6
$1.3
$2,064.4
$(285.7)$1,780.6
$18.3
Net income—
—
72.3
—
72.3
1.5
Other comprehensive (loss) income—
—
—
8.3
8.3
—
Stock-based compensation—
4.1
—
—
4.1
—
Reclassification of stranded tax effects—
—
30.0
(30.0)—
—
Acquisition/surrender of common shares(1)
—
(5.3)(6.3)—
(11.6)—
Cash dividends declared ($0.84 per share)—
—
(45.7)—
(45.7)—
Dividends to noncontrolling interest—
—
—
—
—
(1.0)
Directors deferred compensation—
0.1
—
—
0.1
—
BALANCE AT MARCH 31, 2019$0.6
$0.2
$2,114.7
$(307.4)$1,808.1
$18.8

(1)For accounting purposes, the Company treats repurchased shares as constructively retired when acquired and accordingly charges the purchase price against Common Stockcommon stock par value, Additional paid-in capital, to the extent available, and Retained earnings. As a resultThe change in Retained earnings of $34.1 million and $6.3 million in the first quarter of 2020, and 2019, respectively, reflects this accounting treatment, during the first nine months of 2017, $72.1 million of purchase price of repurchased shares was allocated to retained earnings.treatment.

A summary of the changes in equity for the nine months ended September 30, 2017 and 2016 is provided below (in millions):
 Nine Months Ended September 30,
 20172016
 
Hubbell
Shareholders’
Equity

Noncontrolling
interest

Total Equity
Hubbell
Shareholders’
Equity

Noncontrolling
interest

Total Equity
EQUITY, JANUARY 1$1,592.8
$10.4
$1,603.2
$1,740.6
$8.4
$1,749.0
Total comprehensive income262.6
4.8
267.4
217.5
3.5
221.0
Stock-based compensation11.9
—
11.9
13.1
—
13.1
Income tax windfall from stock-based awards, net—
—
—
2.2
—
2.2
Repurchase/surrender of shares of common stock(96.0)—
(96.0)(242.9)—
(242.9)
Issuance of shares related to directors’ deferred compensation, net0.4
—
0.4
0.4
—
0.4
Dividends to noncontrolling interest—
(3.5)(3.5)—
(2.8)(2.8)
Cash dividends declared(115.7)—
(115.7)(105.4)—
(105.4)
EQUITY, SEPTEMBER 30$1,656.0
$11.7
$1,667.7
$1,625.5
$9.1
$1,634.6


The detailed components of total comprehensive income are presented in the Condensed Consolidated StatementStatements of Comprehensive Income.



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NOTE 9 Accumulated Other Comprehensive Loss
 


A summary of the changes in Accumulated other comprehensive loss (net of tax) for the ninethree months ended September 30, 2017March 31, 2020 is provided below (in millions):
(debit) credit
Cash flow
hedge (loss)
gain
Unrealized
gain (loss) on
available-for-
sale securities
Pension
and post
retirement
benefit plan
adjustment
Cumulative
translation
adjustment
Total
BALANCE AT DECEMBER 31, 2019$(0.5)$0.6
$(203.2)$(129.8)$(332.9)
Other comprehensive income (loss) before reclassifications1.8
(0.1)—
(25.6)(23.9)
Amounts reclassified from accumulated other comprehensive loss(0.2)—
1.7
—
1.5
Current period other comprehensive income (loss)1.6
(0.1)1.7
(25.6)(22.4)
BALANCE AT MARCH 31, 2020$1.1
$0.5
$(201.5)$(155.4)$(355.3)
(debit) credit
Cash flow
hedge loss


Unrealized
gain (loss) on
available-for-
sale securities

Pension
and post
retirement
benefit plan
adjustment

Cumulative
translation
adjustment

Total
BALANCE AT DECEMBER 31, 2016$—
$(1.2)$(180.5)$(120.8)$(302.5)
Other comprehensive income (loss) before reclassifications(2.3)1.0
—
35.3
34.0
Amounts reclassified from accumulated other comprehensive loss0.4
—
5.5
—
5.9
Current period other comprehensive income (loss)(1.9)1.0
5.5
35.3
39.9
BALANCE AT SEPTEMBER 30, 2017$(1.9)$(0.2)$(175.0)$(85.5)$(262.6)

 

A summary of the gain (loss) reclassifications out of Accumulated other comprehensive loss for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 is provided below (in millions): 
Details about Accumulated Other
Comprehensive Loss Components
Three Months Ended September 30, 2017Three Months Ended September 30, 2016 
Location of Gain (Loss)
Reclassified into Income
Cash flow hedges gain (loss): 
 
  
Forward exchange contracts$(0.2)$—
 Net sales
 (0.4)(0.4) Cost of goods sold
 (0.6)(0.4) Total before tax
 0.2
0.1
 Tax (expense) benefit
 $(0.4)$(0.3) Gain (loss) net of tax
Defined benefit pension and post retirement benefit items: 
 
  
Amortization of prior-service costs$0.3
$0.2
(a)  
Amortization of actuarial gains/(losses)(3.0)(3.4)(a)  
Settlement and curtailment losses—
—
(a)  
 (2.7)(3.2) Total before tax
 0.9
1.1
 Tax benefit (expense)
 $(1.8)$(2.1) (Loss) gain net of tax
Losses reclassified into earnings$(2.2)$(2.4) (Loss) gain net of tax
 Three Months Ended March 31, 
Details about Accumulated Other
Comprehensive Loss Components
20202019Location of Gain (Loss) Reclassified into Income
Cash flow hedges gain (loss): 
 
 
Forward exchange contracts$0.1
$0.2
Net sales
 0.2
0.3
Cost of goods sold
 0.3
0.5
Total before tax
 (0.1)(0.2)Tax benefit (expense)
 $0.2
$0.3
Gain (loss) net of tax
Amortization of defined benefit pension and post retirement benefit items: 
 
 
Prior-service costs (a)$0.1
$0.2
 
Actuarial gains/(losses) (a)(2.4)(2.2) 
 (2.3)(2.0)Total before tax
 0.6
0.5
Tax benefit (expense)
 $(1.7)$(1.5)Gain (loss) net of tax
Gains (losses) reclassified into earnings$(1.5)$(1.2) 
(a)
These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 11 -– Pension and Other Benefits in the Notes to Condensed Consolidated Financial Statements for additional details).



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Details about Accumulated Other
Comprehensive Loss Components		Nine Months Ended September 30, 2017Nine Months Ended September 30, 2016 Location of Gain (Loss)
Reclassified into Income
Cash flow hedges gain (loss): 
 
  
Forward exchange contracts$(0.2)$(0.2) Net sales
 (0.4)0.3
 Cost of goods sold
 (0.6)0.1
 Total before tax
 0.2
—
 Tax (expense) benefit
 $(0.4)$0.1
 Gain (loss) net of tax
Defined benefit pension and post retirement benefit items: 
 
  
Amortization of prior-service costs$0.7
$0.6
(a)  
Amortization of actuarial gains/(losses)(8.5)(10.4)(a)  
Settlement and curtailment losses(0.5)—
(a)  
 (8.3)(9.8) Total before tax
 2.8
3.6
 Tax benefit (expense)
 $(5.5)$(6.2) (Loss) gain net of tax
Losses reclassified into earnings$(5.9)$(6.1) (Loss) gain net of tax
(a)These accumulated other comprehensive loss components are included in the computation of net periodic pension cost (see Note 11 - Pension and Other Benefits for additional details).

NOTE 10 Earnings Per Share
 


The Company computes earnings per share using the two-class method, which is an earnings allocation formula that determines earnings per share for common stock and participating securities. Service-based and performance-based restricted stock awards granted by the Company are considered participating securities as these awards contain a non-forfeitable right to dividends.
 
The following table sets forth the computation of earnings per share for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (in millions, except per share amounts):
 Three Months Ended March 31,
 2020
2019
Numerator: 
 
Net income attributable to Hubbell Incorporated$75.0
$72.3
Less: Earnings allocated to participating securities(0.3)(0.3)
Net income available to common shareholders$74.7
$72.0
Denominator: 
 
Average number of common shares outstanding54.3
54.4
Potential dilutive common shares0.3
0.2
Average number of diluted shares outstanding54.6
54.6
Earnings per share: 
 
Basic$1.38
$1.32
Diluted$1.37
$1.32
 Three Months Ended September 30,Nine Months Ended September 30,
 2017
2016
2017
2016
Numerator: 
 
 
 
Net income attributable to Hubbell$80.8
$86.7
$222.7
$228.6
Less: Earnings allocated to participating securities(0.3)(0.3)(0.7)(0.7)
Net income available to common shareholders$80.5
$86.4
$222.0
$227.9
Denominator: 
 
 
 
Average number of common shares outstanding54.6
55.3
54.9
55.6
Potential dilutive common shares0.3
0.2
0.3
0.2
Average number of diluted shares outstanding54.9
55.5
55.2
55.8
Earnings per share: 
 
 
 
Basic$1.47
$1.56
$4.05
$4.10
Diluted$1.47
$1.56
$4.02
$4.08

 
The Company did not have outstanding any significant anti-dilutive securities during the three and nine months ended September 30, 2017March 31, 2020 and 2016.2019.



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NOTE 11 Pension and Other Benefits
 
 
The following table sets forth the components of net pension and other benefit costs for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 (in millions):
 Pension BenefitsOther Benefits
 2020
2019
2020
2019
Three Months Ended March 31, 
 
 
 
Service cost$0.3
$0.5
$—
$—
Interest cost7.2
8.7
0.2
0.3
Expected return on plan assets(8.5)(7.6)—
—
Amortization of prior service cost—
—
(0.1)(0.2)
Amortization of actuarial losses2.4
2.2
—
—
NET PERIODIC BENEFIT COST$1.4
$3.8
$0.1
$0.1
 Pension BenefitsOther Benefits
 2017
2016
2017
2016
Three Months Ended September 30, 
 
 
 
Service cost$1.5
$3.1
$—
$—
Interest cost9.3
10.5
0.4
0.3
Expected return on plan assets(8.6)(11.3)—
—
Amortization of prior service cost—
0.1
(0.3)(0.3)
Amortization of actuarial losses3.0
3.4
—
—
Curtailment and settlement losses—
—
—
—
NET PERIODIC BENEFIT COST$5.2
$5.8
$0.1
$—
Nine Months Ended September 30, 
 
 
 
Service cost$4.5
$10.1
$—
$—
Interest cost27.8
31.5
0.8
0.9
Expected return on plan assets(25.6)(33.3)—
—
Amortization of prior service cost—
0.1
(0.7)(0.7)
Amortization of actuarial losses8.5
10.4
—
—
Curtailment and settlement losses0.5
—
—
—
NET PERIODIC BENEFIT COST$15.7
$18.8
$0.1
$0.2

 
Employer Contributions
 
The Company anticipates making required contributions of approximately $4.3 million to its foreign pension plans during 2020, of which $0.1 million has been contributed through March 31, 2020. Although not required by ERISA and the Internal Revenue Code, the Company may elect to make aadditional voluntary contribution to its qualified domestic defined benefit pension plan in 2017. The Company anticipates2020. Additionally we anticipate making required contributionscash payments of approximately $1.7$6.0 million and $5.0 million due in 2020 and 2021, respectively, related to its foreignthe previously disclosed settlement agreement with a multi-employer pension plans during 2017, of which $1.3 million has been contributed through September 30, 2017.plan.
 

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NOTE 12 Guarantees
 


The Company records a liability equal to the fair value of guarantees in accordance with the accounting guidance for guarantees. When it is probable that a liability has been incurred and the amount can be reasonably estimated, the Company accrues for costs associated with guarantees. The most likely costs to be incurred are accrued based on an evaluation of currently available facts and, where no amount within a range of estimates is more likely, the minimum is accrued.

As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the fair value and maximum potential payment related to the Company’s guarantees were not material.
 
The Company offers product warranties that cover defects on most of its products. These warranties primarily apply to products that are properly installed, maintained and used for their intended purpose. The Company accrues estimated warranty costs at the time of sale. Estimated warranty expenses, recorded in cost of goods sold, are based upon historical information such as past experience, product failure rates, or the estimated number of units to be repaired or replaced. Adjustments are made to the product warranty accrual as claims are incurred, additional information becomes known, or as historical experience indicates.
 
Changes in the accrual for product warranties during the ninethree months ended September 30, 2017March 31, 2020 and 20162019 are set forth below (in millions):
 20202019
BALANCE AT JANUARY 1, (a)
$82.1
$92.7
Provision4.6
3.5
Expenditures/payments/other(4.2)(12.0)
BALANCE AT MARCH 31, (a)
$82.5
$84.2

 20172016
BALANCE AT JANUARY 1,$13.8
$13.2
Provision9.6
7.0
Expenditures/other(8.2)(6.7)
BALANCE AT SEPTEMBER 30,$15.2
$13.5
(a) Refer to Note 6 – Other Accrued Liabilities and Note 7 – Other Non-Current Liabilities for a breakout of short-term and long-term warranties.



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NOTE 13 Fair Value Measurement
 
 
Financial Instruments

Financial instruments which potentially subject the Company to significant concentrations of credit loss risk consist of trade receivables, cash equivalents and investments. The Company grants credit terms in the normal course of business to its customers. Due to the diversity of its product lines, the Company has an extensive customer base including electrical distributors and wholesalers, electric utilities, equipment manufacturers, electrical contractors, telecommunication companies and retail and hardware outlets. As part of its ongoing procedures, the Company monitors the credit worthiness of its customers. Bad debt write-offs have historically been minimal. The Company places its cash and cash equivalents with financial institutions and limits the amount of exposure in any one institution.
At March 31, 2020 our accounts receivable balance was $707.7 million, net of allowances of $13.6 million. While we have not experienced any significant collection issues to date, during the three months ended March 31, 2020 our allowances increased approximately $5.9 million. The cumulative effect of the adoption of ASC 326 resulted in a $1.3 million increase to the opening balance. The remainder of the increase is primarily the result of our estimate of expected credit losses resulting from the deterioration of general economic conditions, including the recent declines in oil prices and potential impacts of the COVID-19 pandemic, which we anticipate could have a negative impact on certain of our customers ability to satisfy their obligations to Hubbell.
Investments
 
At September 30, 2017March 31, 2020 and December 31, 2016,2019, the Company had $56.9$48.5 million and $57.4$50.7 million, respectively, of available-for-sale municipal debt securities. These investments had an amortized cost of $48.0 million and $50.1 million, respectively. NaN allowance for credit losses related to our available-for-sale debt securities consistingwas recorded for the three months ended March 31, 2020. As of municipal bonds classified in Level 2 ofMarch 31, 2020 and December 31, 2019 the unrealized losses attributable to our available-for-sale debt securities was $0.1 million and $0.1 million. The fair value hierarchyof available-for-sale debt securities with unrealized losses was $8.6 million at March 31, 2020 and an investment in the redeemable preferred stock of a privately-held electrical utility substation security provider classified in Level 3 of the fair value hierarchy.$3.6 million at December 31, 2019. The Company also had $13.2 million of trading securities of $18.1 million at September 30, 2017March 31, 2020 and $10.2$19.2 million at December 31, 20162019 that are carried on the balance sheet at fair value. Unrealized gains and losses associated with available-for-sale debt securities are reflected in Accumulated other comprehensive loss, net of tax, while unrealized gains and losses associated with trading securities are reflected in the results of operations.


Fair value measurements


Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The FASB fair value measurement guidance established a fair value hierarchy that prioritizes the inputs used to measure fair value. The three broad levels of the fair value hierarchy are as follows:
 
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities.
 
Level 2 – Quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly.
 
Level 3 – Unobservable inputs for which little or no market data exists, therefore requiring a company to develop its own assumptions.







































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The following table shows, by level within the fair value hierarchy, our financial assets and liabilities that are accounted for at fair value on a recurring basis at September 30, 2017March 31, 2020 and December 31, 20162019 (in millions):
Asset (Liability)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Quoted Prices in
Active Markets for
Similar Assets
(Level 2)
Unobservable inputs for which little or no market data exists (Level 3)Total
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Quoted Prices in
Active Markets for
Similar Assets
(Level 2)
Unobservable inputs
for which little or no
market data exists
(Level 3)
Total
September 30, 2017   
Money market funds (a)
$198.1
$—
$—
$198.1
Time deposits (a)
—
29.9
—
29.9
Available for sale investments—
52.6
4.3
56.9
Trading securities13.2
—
—
13.2
Deferred compensation plan liabilities(13.2)—
—
(13.2)
Derivatives: 
Forward exchange contracts-Assets (b)
—
—
—
—
Forward exchange contracts-(Liabilities) (c)
—
(2.2)—
(2.2)
TOTAL$198.1
$80.3
$4.3
$282.7
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Quoted Prices in
Active Markets for
Similar Assets
(Level 2)
Unobservable inputs for which little or no market data exists (Level 3)Total
December 31, 2016   
March 31, 2020   
Money market funds (a)
$263.5
$—
$—
$263.5
$159.4
$—
$—
$159.4
Available for sale investments—
53.6
3.8
57.4
—
48.5
—
48.5
Trading securities10.2
—
—
10.2
18.1
—
—
18.1
Deferred compensation plan liabilities(10.2)—
—
(10.2)(18.1)—
—
(18.1)
Derivatives:  
Forward exchange contracts-Assets (b)
—
0.8
—
0.8
—
1.9
—
1.9
TOTAL$159.4
$50.4
$—
$209.8
 
Asset (Liability)
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Quoted Prices in
Active Markets for
Similar Assets
(Level 2)
Unobservable inputs
for which little or no
market data exists
(Level 3)
Total
December 31, 2019   
Money market funds(a)
$27.5
$—
$—
$27.5
Available for sale investments—
50.7
—
50.7
Trading securities19.2
—
—
19.2
Deferred compensation plan liabilities(19.2)—
—
(19.2)
Derivatives: 
Forward exchange contracts-(Liabilities) (c)
—
(0.1)—
(0.1)—
(0.3)—
(0.3)
TOTAL$263.5
$54.3
$3.8
$321.6
$27.5
$50.4
$—
$77.9
(a) Money market funds and time deposits are reflected in Cash and cash equivalents in the Condensed Consolidated Balance Sheet.Sheets.
(b) Forward exchange contracts-Assets are reflected in Other current assets in the Condensed Consolidated Balance Sheet.Sheets.
(c) Forward exchange contracts-(Liabilities) are reflected in Other accrued liabilities in the Condensed Consolidated Balance Sheet.Sheets.


 
The methods and assumptions used to estimate the Level 2 and Level 3 fair values were as follows:
 
Forward exchange contracts – The fair value of forward exchange contracts werewas based on quoted forward foreign exchange prices at the reporting date.


Available-for-sale municipal bonds classified in Level 2 – The fair value of available-for-sale investments in municipal bonds is based on observable market-based inputs, other than quoted prices in active markets for identical assets. 


Available-for-sale redeemable preferred stock classified in Level 3 – The fair value of the available-for-sale investment in redeemable preferred stock is valued based on a discounted cash flow model, using significant unobservable inputs, including expected cash flows and the discount rate.
During the three and nine months ended September 30, 2017 there were no transfers of financial assets or liabilities in or out of Level 1, Level 2, or Level 3 of the fair value hierarchy.


Deferred compensation plans
 
The Company offers certain employees the opportunity to participate in non-qualified deferred compensation plans. A participant’s deferrals are invested in a variety of participant-directed debt and equity mutual funds that are classified as trading securities. During the nine months ended September 30, 2017 and 2016, theThe Company purchased $1.8$2.2 million and $1.3 million, respectively, of trading securities related to these deferred compensation plans.plans during each of the three months ended March 31, 2020 and 2019. As a result of participant distributions, the Company sold $0.3$0.8 million of these trading securities during the ninethree months ended September 30, 2017March 31, 2020 and $1.2$0.6 million during the ninethree months ended September 30, 2016.March 31, 2019. The unrealized gains and losses associated with these trading securities are directly offset by the changes in the fair value of the underlying deferred compensation plan obligation.


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Derivatives
 
In order to limit financial risk in the management of its assets, liabilities and debt, the Company may use derivative financial instruments such as foreign currency hedges, commodity hedges, interest rate hedges and interest rate swaps. All derivative financial instruments are matched with an existing Company asset, liability or forecasted transaction. Market value gains or losses on the derivative financial instrument are recognized in income when the effects of the related price changes of the underlying asset, liability or forecasted transaction are recognized in income. Derivative assets and derivative liabilities are not offset in the Condensed Consolidated Balance Sheet.Sheets.
 
In 20172020 and 2016,2019, the Company entered into a series of forward exchange contracts to purchase U.S. dollars in order to hedge exposure to fluctuating rates of exchange for both anticipated inventory purchases and forecasted sales by its subsidiaries that transact business in Canada. As of September 30, 2017,March 31, 2020, the Company had 5231 individual forward exchange contracts for an aggregate notional amount of $38.0$34.8 million, having various expiration dates through September 2018.February 2021. These contracts have been designated as cash flow hedges in accordance with the accounting guidance for derivatives.
 
The following table summarizes the results of cash flow hedging relationships for the three months ended September 30, 2017March 31, 2020 and 20162019 (in millions):
 
Derivative Gain/(Loss) Recognized in
Accumulated Other Comprehensive
Income (net of tax)
Location of Gain/(Loss)
Reclassified into Income
Gain/(Loss) Reclassified into
Earnings Effective Portion (net of tax)
Derivative Instrument2020
2019
(Effective Portion)2020
2019
Forward exchange contract$1.8
$(0.3)Net sales$0.1
$0.1
   Cost of goods sold$0.1
$0.2


 
Derivative Gain/(Loss) Recognized in
Accumulated Other Comprehensive
Income (net of tax)
Location of Gain/(Loss)
Reclassified into Income
Gain/(Loss) Reclassified into
Earnings Effective Portion (net of tax)
Derivative Instrument2017
2016
(Effective Portion)2017
2016
Forward exchange contract$(1.4)$(0.3)Net sales$(0.1)$—
   Cost of goods sold$(0.3)$(0.3)

The following table summarizes the results of cash flow hedging relationships for the nine months ended September 30, 2017 and 2016 (in millions):
 
Derivative Gain/(Loss) Recognized in
Accumulated Other Comprehensive
Loss (net of tax)
Location of Gain/(Loss)
Reclassified into Income
Gain/(Loss) Reclassified into
Earnings Effective Portion (net of tax)
Derivative Instrument2017
2016
(Effective Portion)2017
2016
Forward exchange contract$(2.3)$(1.8)Net sales$(0.1)$(0.2)
   Cost of goods sold$(0.3)$0.3

Hedge ineffectiveness was immaterial with respect to the forward exchange cash flow hedges during the three and nine months ended September 30, 2017 and 2016.


Long Term Debt


As of September 30, 2017March 31, 2020 and December 31, 2016,2019, the carrying value of long-term debt, including the $37.5 million and $34.4 million current portion of the Term Loan, net of unamortized discount and debt issuance costs, was $1,634.8 million and $1,540.4 million, respectively. The estimated fair value of ourthe long-term debt as of March 31, 2020 and December 31, 2019 was $1,018.8$1,651.4 million and $1,017.8$1,592.2 million, respectively, using quoted market prices in active markets for similar liabilities (Level 2).



NOTE 14 Commitments and Contingencies



The Company is subject to various legal proceedings arising in the normal course of its business. These proceedings include claims for damages arising out of use of the Company’s products, intellectual property, workers’ compensation and environmental matters. The Company is self-insured up to specified limits for certain types of claims, including product liability and workers’ compensation, and is fully self-insured for certain other types of claims, including environmental and intellectual property matters. The Company recognizes a liability for any contingency that in management’s judgment is probable of occurrence and can be reasonably estimated. We continually reassess the likelihood of adverse judgments and outcomes in these matters, as well as estimated ranges of possible losses based upon an analysis of each matter which includes considerationadvice of outside legal counsel and, if applicable, other experts.




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NOTE 15 Restructuring Costs and Other
 


In the ninethree months ended September 30, 2017,March 31, 2020, we incurred costs for restructuring actions initiated in 20172020 as well as costs for restructuring actions initiated in the prior year.years. Our restructuring actions are associated with cost reduction efforts that include the consolidation of manufacturing and distribution facilities as well as workforce reductions and the sale or exit of business unitsbusinesses we determine to be non-strategic. Restructuring costs include severance and employee benefits, asset impairments, accelerated depreciation, as well as facility closure, contract termination and certain pension costs that are directly related to restructuring actions. These costs are predominantly settled in cash from our operating activities and are generally settled within one year, with the exception of asset impairments, which are non-cash, and a $12.5 million charge in the fourth quarter of 2016 to recognize the estimated liability associated with the withdrawal from a multi-employer pension plan. That withdrawal liability may be settled either in periodic payments over approximately 19 years, or in a lump sum, subject to negotiations expected to occur before the end of 2017.non-cash.


Pre-tax restructuring costs incurred in each of our reporting segments and the location of the costs in the Condensed Consolidated StatementStatements of Income for the three and nine months ended September 30, 2017March 31, 2020 and 20162019 is as follows (in millions):
 Three Months Ended September 30,
 201720162017201620172016
 Cost of goods soldSelling & administrative expenseTotal
Electrical Segment$1.9
$4.2
$0.9
$0.1
$2.8
$4.3
Power Segment0.3
—
0.2
0.2
0.5
0.2
Total Pre-Tax Restructuring Costs$2.2
$4.2
$1.1
$0.3
$3.3
$4.5
 Three Months Ended March 31,
 202020192020201920202019
 Cost of goods soldSelling & administrative expenseTotal
Electrical$0.5
$0.2
$0.4
$1.0
$0.9
$1.2
Utility Solutions2.5
0.5
0.1
1.3
2.6
1.8
Total Pre-Tax Restructuring Costs$3.0
$0.7
$0.5
$2.3
$3.5
$3.0

 Nine Months Ended September 30,
 201720162017201620172016
 Cost of goods soldSelling & administrative expenseTotal
Electrical Segment$8.2
$7.8
$3.3
$5.0
$11.5
$12.8
Power Segment1.4
0.5
0.6
0.6
2.0
1.1
Total Pre-Tax Restructuring Costs$9.6
$8.3
$3.9
$5.6
$13.5
$13.9


The following table summarizes the accrued liabilities for our restructuring actions (in millions):
 Beginning Accrued Restructuring Balance 1/1/20
Pre-tax Restructuring Costs
Utilization and Foreign Exchange
Ending Accrued Restructuring Balance 3/31/2020
2020 Restructuring Actions    
Severance$—
$1.1
$(0.3)$0.8
Asset write-downs—
—
—
—
Facility closure and other costs—
0.1
(0.1)—
    Total 2020 Restructuring Actions$—
$1.2
$(0.4)$0.8
2019 and Prior Restructuring Actions    
Severance$11.3
$(0.6)$(4.0)$6.7
Asset write-downs—
0.1
(0.1)—
Facility closure and other costs6.1
2.8
(2.8)6.1
    Total 2019 and Prior Restructuring Actions$17.4
$2.3
$(6.9)$12.8
Total Restructuring Actions$17.4
$3.5
$(7.3)$13.6

 Beginning Accrued Restructuring Balance 1/1/17
Pre-tax Restructuring Costs
Utilization and Foreign Exchange
Ending Accrued Restructuring Balance 9/30/2017
2017 Restructuring Actions    
Severance$—
$5.8
$(2.6)$3.2
Asset write-downs—
0.1
(0.1)—
Facility closure and other costs—
2.5
(2.0)0.5
    Total 2017 Restructuring Actions$—
$8.4
$(4.7)$3.7
2016 and Prior Restructuring Actions    
Severance$10.4
$(0.6)$(4.7)$5.1
Asset write-downs—
—
—
—
Facility closure and other costs (a)
14.1
5.7
(6.0)13.8
    Total 2016 and Prior Restructuring Actions$24.5
$5.1
$(10.7)$18.9
Total Restructuring Actions$24.5
$13.5
$(15.4)$22.6

(a) Facility closure and other costs as of 1/1/17 includes a charge of approximately $12.5 million to accrue the estimated liability associated with the anticipated withdrawal from a multi-employer pension plan as a result of a restructuring action.


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The actual costs incurred and total expected cost in each of our reporting segments of our on-going restructuring actions are as follows (in millions):
 Total expected costs
Costs incurred during 2019
Costs incurred in the first three months of 2020
Remaining costs at 3/31/2020
2020 Restructuring Actions    
Electrical$1.4
$—
$0.9
$0.5
Utility Solutions0.3
—
0.3
—
    Total 2020 Restructuring Actions$1.7
$—
$1.2
$0.5
2019 and Prior Restructuring Actions    
Electrical$22.1
$20.5
$—
$1.6
Utility Solutions21.3
11.5
2.3
7.5
    Total 2019 and Prior Restructuring Actions$43.4
$32.0
$2.3
$9.1
Total Restructuring Actions$45.1
$32.0
$3.5
$9.6



HUBBELL INCORPORATED-Form 10-Q    21
 Total expected costs
Costs incurred during 2016
Costs incurred during first nine months of 2017
Remaining costs at 9/30/2017
2017 Restructuring Actions    
Electrical Segment$8.4
$—
$6.4
$2.0
Power Segment3.7
—
2.0
1.7
    Total 2017 Restructuring Actions$12.1
$—
$8.4
$3.7
2016 and Prior Restructuring Actions    
Electrical Segment (a)
$41.8
$33.9
$5.1
$2.8
Power Segment1.4
1.1
—
0.3
    Total 2016 and Prior Restructuring Actions$43.2
$35.0
$5.1
$3.1
Total Restructuring Actions$55.3
$35.0
$13.5
$6.8
(a) Costs incurred in 2016 relating to 2016 Restructuring Actions in the Electrical segment include the $12.5 million previously mentioned charge representing the estimated withdrawal liability from a multi-employer pension plan. Any potential future liability in excess of the amount already recognized in 2016 is not included in the remaining costs at September 30, 2017. Additional information about the estimated withdrawal liability can be found in Note 10 - Retirement Benefits in the Notes to Consolidated Financial Statements in the Hubbell Incorporated Annual Report on Form 10-K for the year ended December 31, 2016.

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NOTE 16 Long Term Long-Term Debt and Financing Arrangements
 

Long-term debt consists of the following (in millions):
MaturitySeptember 30, 2017
December 31, 2016
MaturityMarch 31, 2020
December 31, 2019
Senior notes at 5.95%2018$—
$299.3
Senior notes at 3.625%2022297.8
297.5
2022$298.9
$298.8
Senior notes at 3.35%2026394.2
393.7
2026395.9
395.7
Senior notes at 3.15%2027294.7
—
2027296.0
295.9
Senior notes at 3.50%2028444.3
444.0
Term loan, net of current portion of $37.5 and $34.4, respectively202362.2
71.6
2018 Credit Facility2023100.0
—
TOTAL LONG-TERM DEBT (a)
 $986.7
$990.5
       $1,597.3
$1,506.0
(a)Long-term debt is presented net of debt issuance costs and unamortized discounts.


In August 2017,The Company has a five-year revolving credit agreement (the "2018 Credit Facility") with a syndicate of lenders that provides a $750 million committed revolving credit facility. Commitments under the Company completed2018 Credit Facility may be increased (subject to certain conditions) to an aggregate amount not to exceed $1.25 billion. The interest rate applicable to borrowings under the 2018 Credit Facility is generally either the adjusted LIBOR plus an applicable margin (determined by a publicratings-based grid) or the alternate base rate. The single financial covenant in the 2018 Credit Facility requires that total debt offeringnot exceed 65% of $300 million aggregate principal amounttotal capitalization as of its long-term unsecured, unsubordinated notes maturing in August 2027 and bearing interest at a fixed ratethe last day of 3.15% (the "2027 Notes"). Net proceeds from the issuance were $294.6 million after deducting the discount on the notes and offering expenses paid byeach fiscal quarter of the Company. The 2027 Notes2018 Credit Facility expires in February 2023.

In March 2020, the Company borrowed $100 million under the 2018 Credit Facility and in April 2020, the Company borrowed an additional $125 million. The current weighted average interest rate for the Company's borrowings under the 2018 Credit Facility is 2.15%. Borrowings outstanding as of March 31, 2020 are fixed rate indebtedness, are callable at any time with a make whole premium and are only subject to accelerated payment prior to maturityclassified within long-term debt in the event of a default (including as a result of the Company's failure to meet certain non-financial covenants) under the indenture governing the 2027 Notes, as modified by the supplemental indenture creating such notes, or upon a change in control event as defined in such indenture. The Company was in compliance with all non-financial covenants under the indenture as of September 30, 2017.Condensed Consolidated Balance Sheet. There were 0 borrowings outstanding at December 31, 2019.

In September 2017, the Company applied the net proceeds from the 2027 Notes to redeem all of its $300 million outstanding long-term, unsecured, unsubordinated notes maturing in 2018 and bearing interest at a fixed rate of 5.95% (the "2018 Notes"). In connection with this redemption, the Company recognized a loss on the early extinguishment of the 2018 Notes of $6.3 million on an after-tax basis.


At December 31, 2016,2019, the Company had $3.2$65.4 million of short-term debt outstanding. The Company had $93.8$106.7 million short-term debt outstanding at September 30, 2017,March 31, 2020, which consisted primarily of commercial paper.paper and the current portion of the Term Loan.



HUBBELL INCORPORATED-Form 10-Q    22

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NOTE 17 Stock-Based Compensation

As of March 31, 2020, the Company had various stock-based awards outstanding which were issued to executives and other key employees. The Company recognizes the grant-date fair value of all stock-based awards to employees over their respective requisite service periods (generally equal to an award’s vesting period), net of estimated forfeitures. A stock-based award is considered vested for expense attribution purposes when the employee’s retention of the award is no longer contingent on providing subsequent service. For those awards that vest immediately upon retirement eligibility, the Company recognizes compensation cost immediately for retirement-eligible individuals or over the period from the grant date to the date retirement eligibility is achieved, if less than the stated vesting period.
The Company’s long-term incentive program for awarding stock-based compensation includes a combination of restricted stock, stock appreciation rights (“SARs”), and performance shares of the Company’s common stock pursuant to the Hubbell Incorporated 2005 Incentive Award Plan as amended and restated (the "Award Plan"). Under the Award Plan, the Company may authorize up to 9.7 million shares of common stock to settle awards of restricted stock, performance shares, or SARs. The Company issues new shares to settle stock-based awards. In 2020, the Company's grant of stock-based awards included restricted stock, SARs and performance shares.

Each of the compensation arrangements is discussed below.

Restricted Stock

The Company issues various types of restricted stock awards all of which are considered outstanding at the time of grant, as the award holders  are entitled to dividends and voting rights. Unvested restricted stock awards are considered participating securities when computing earnings per share. Restricted stock grants are not transferable and are subject to forfeiture in the event of the  recipient’s termination of employment prior to vesting.

Restricted Stock Issued to Employees - Service Condition
Restricted stock awards that vest based upon a service condition are expensed on a straight-line basis over the requisite service period. These awards generally vest in three equal installments on each of the first three anniversaries of the grant date, however in December 2018, July 2019 and February 2020 the Company granted a certain number of these awards that generally vest on the third-year anniversary of the grant date. The fair value of these awards is measured by the average of the high and low trading prices of the Company’s common stock on the most recent trading day immediately preceding the grant date (“measurement date”).

In February 2020, the Company granted 80,876 restricted stock awards with a fair value per share of $149.49.
Stock Appreciation Rights

SARs grant the holder the right to receive, once vested, the value in shares of the Company's common stock equal to the positive difference between the grant price, as determined using the mean of the high and low trading prices of the Company’s common stock on the measurement date, and the fair market value of the Company’s common stock on the date of exercise. This amount is payable in shares of the Company’s common stock. SARs vest and become exercisable in three equal installments during the first three years following the grant date and expire ten years from the grant date.

In February 2020, the Company granted 250,080 SAR awards. The fair value of each SAR award was measured using the Black-Scholes option pricing model.

The following table summarizes the weighted-average assumptions used in estimating the fair value of the SARs granted during the first three months of 2020:
Grant DateExpected Dividend YieldExpected VolatilityRisk Free Interest RateExpected TermWeighted Avg. Grant Date Fair Value of 1 SAR
February 20202.5%23.2%1.5%5.5 Years$25.28

The expected dividend yield was calculated by dividing the Company’s expected annual dividend by the average stock price for the past three months. Expected volatilities are based on historical volatilities of the Company’s stock for a period consistent with the expected term. The expected term of SARs granted was based upon historical exercise behavior of stock options and SARs. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the award.


HUBBELL INCORPORATED-Form 10-Q    20    23
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Performance Shares

Performance shares represent the right to receive a share of the Company’s common stock subject to the achievement of certain market or performance conditions established by the Company’s Compensation Committee and measured over a three-year period. Partial vesting in these awards may occur after separation from the Company for retirement eligible employees. Shares are not vested until approved by the Company’s Compensation Committee.

Performance Shares - Performance and Market Conditions

In February 2020, the Company granted 63,868 shares that will vest subject to a performance condition and service requirement. The number of shares vested is then modified by a market condition as described below.

Thirty-four percent of shares granted will vest based on Hubbell’s compounded annual growth rate of net sales as compared to that of the companies that comprise the S&P Capital Goods 900 index. Thirty-three percent of shares granted will vest based on achieved operating profit margin performance as compared to internal targets, and thirty-three percent of shares granted will vest based on achieved trade working capital as a percent of net sales as compared to internal targets. Each of these performance conditions is measured over the same three-year performance period. The cumulative result of these performance conditions can result in a number of shares earned in the range of 0% - 200% of the target number of shares granted. That cumulative performance achieved is then further modified based on the Company's three-year TSR relative to the companies that constitute the S&P Capital Goods 900 index, to potentially increase or reduce the shares earned by 20%.

The fair value of the award was determined based upon a lattice model. The Company expenses these awards on a straight-line basis over the requisite service period and including an assessment of the performance achieved to date. The weighted average fair value per share was $143.45 for the awards granted in the first quarter of 2020.

Grant DateFair ValuePerformance PeriodPayout Range
February 2020$143.45Jan 2020-Dec 20220-200% +/- 20%




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ITEM 2Management’s Discussion and Analysis of Financial Condition and Results of Operations




Executive Overview of the Business
 
 
The Company is primarily engaged in the design, manufacture and salea global manufacturer of quality electrical products and electronic productsutility solutions 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, Australia, Spain and Ireland. The Company also participates in joint ventures in Taiwan, and Hong Kong and the Philippines, and maintains offices in Singapore, Italy, China, India, Mexico, South Korea, Chile, and countries in the Middle East. The Company employsemployed approximately 17,90018,700 individuals worldwide.worldwide as of March 31, 2020.

The Company’s reporting segments consist of the Electrical segment and the Utility Solutions segment (formerly named the Power segment.Systems segment). In the first quarter of 2020 our former Power segment was re-named Utility Solutions to reflect the depth and breadth of our industry-leading offering for electric, water, gas and telecom utilities ranging from a wide variety of critical infrastructure components to full-scale smart grid solutions. Results for the three and nine months ended September 30, 2017March 31, 2020 by segment are included under “Segment Results” within this ManagementManagement’s Discussion and Analysis. In August 2019, the Company completed the sale of Haefely Test, AG (“Haefely”), which was previously included within the Electrical segment.

The Company's long-term strategy is to serve its customers with reliable and innovative electrical and related infrastructure solutions with desired brands and high-quality service, delivered through a competitive cost structure; to complement organic revenue growth with acquisitions that enhance its product offerings; and to allocate capital effectively to create shareholder value. In executing this strategy, the Company is focused on growing profits and delivering attractive returns to shareholders by executing a business plan focused on the following key initiatives: growing revenue, aligning the cost structure, improving productivity and deploying capital effectively.
 
Our strategy to growcomplement organic revenue growth with acquisitions is focused on complementing organic growth with acquisitionsacquiring assets that extend our capabilities, expand our product offerings, and present opportunities to compete in core, adjacent or complementary markets. Our organic growth initiatives remain focused on expanding market share through new product introductions and more effective utilization of sales and marketing efforts acrossacquisition strategy also provides the organization. Acquisitions are a key component of our revenue growth strategy, not only to expand our reach into new markets and further into existing markets with new products, but alsoopportunity to advance our revenue growth objectives during periods of weakness or inconsistency in our end-markets.


Aligning ourOur strategy to deliver products through a competitive cost structure with the needs of our business is a key initiative and has resulted in thepast and ongoing restructuring and related activities we have initiated, beginning in 2014.activities. Our restructuring and related efforts include the consolidation of manufacturing and distribution facilities, and workforce actions, as well as streamlining and consolidating our back-office functions. The primary objectives of our restructuring and related activities are to optimize our manufacturing footprint, cost structure, and effectiveness and efficiency of our workforce.


Productivity improvement also continues to be a key area of focus for the Company and efforts to drive productivity work withcomplement our restructuring and related activities to minimize the impact of rising material costs and administrative cost inflation. MaterialBecause material costs are approximately two-thirds of our cost of goods sold, therefore volatility in this area can significantly impact profitability. Our goal is to have pricing and productivity programs that offset material and other inflationary cost increases as well as pay for investments in key growth areas.


Productivity programs impactaffect 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 continue to increase manufacturing efficiency. In addition, we continue to build upon the benefits of our enterprise resource planning system across all functions.














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Impact of The COVID-19 Pandemic

During March 2020, a global pandemic was declared by the World Health Organization related to the rapidly growing outbreak of a novel strain of coronavirus (COVID-19). The pandemic has significantly impacted global economic conditions and in the U.S., accelerated during the first half of March as federal, state and local governments reacted to the public health crisis with mitigation measures, creating significant uncertainties in the U.S. and global economies. The extent to which the coronavirus pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. Due to heightened uncertainty relating to the impacts of the COVID-19 pandemic on our business operations, including the duration and impact on overall customer demand, we withdrew our 2020 guidance.

Most of our manufacturing operations are currently deemed essential and continue to operate. Our top priority has been to take appropriate actions to protect the health and safety of our employees. We have adjusted standard operating procedures within our business operations to ensure continued worker, vendor and customer safety, and are continually monitoring evolving health guidelines and responding to changes as appropriate. These procedures include expanded and more frequent cleaning within facilities, implementation of appropriate distancing programs, and requiring use of certain personal protective equipment. We have also implemented a mandatory work-at-home program for the foreseeable future for all of our administrative offices and employees. Despite these efforts, the COVID-19 pandemic continues to pose the risk that our employees, contractors, suppliers, customers and other business partners may be prevented from conducting business activities, partially or completely, for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities or imposed by our management, or that the pandemic may otherwise interrupt or impair business activities.

We also anticipate that the disruption in economic activity as a result of social distancing measures to combat the COVID-19 pandemic will have an adverse impact across our end markets. We have developed action plans for a wide range of scenarios, but given the uncertainty regarding the magnitude and duration of the pandemic's effects, it is impossible to predict with specificity or quantify the future impact on our business, financial condition and results of operations. In general terms, however, we expect our Electrical segment to experience significant volume declines over the balance of 2020. In our Utility Solutions segment, demand continues to be strong within our Power Systems business group, which provides critical T&D components to electrical utilities, however our supply chain may be temporarily disrupted in the second quarter of 2020 due to local regulatory closure of two large manufacturing facilities in Mexico in late April, and the duration of those closures is yet to be determined. We expect our Aclara business group to be negatively impacted in the near-term by project delays on smart infrastructure deployments.

In the first quarter of 2020 our manufacturing operations were disrupted by a limited number of shutdowns mandated by government authorities or from actual or potential exposure to COVID-19, which resulted in an increase in unabsorbed manufacturing costs. We expect these disruptions will continue to impact our operating results in future periods and the ultimate extent and duration of these disruptions could have a material adverse affect on our results of operations and liquidity in 2020. During April 2020, we have experienced disruptions, including work stoppages, in several of our manufacturing operations, including in the U.S., Mexico, and the United Kingdom. The economic impact of those disruptions remains unclear. We also incurred higher costs in the first quarter of 2020 due to increases to our bad debt reserves in light of expected credit losses resulting from the deterioration of general economic conditions. In the second quarter, our direct and indirect labor costs may increase due to the appreciation pay increase that we have instituted for our U.S. and Mexican hourly employees as well as salaried employees that are responsible for ongoing plant and warehouse operations. We have also implemented an emergency paid leave program for our employees. The extent and duration of additional cost increases of this nature in the future, or other future costs increases due to the COVID-19 pandemic, remains uncertain.

In addition, we have taken actions that we expect may mitigate a portion of the impact of the anticipated decline in demand and cost increases. Cost containment actions effective for the second quarter of 2020 include a 25% salary reduction for senior executives and 15% salary reduction for all other executives, a two week mandatory furlough for other salaried employees sometime during the second quarter, and the Board of Directors will forgo its quarterly retainer payments for the second quarter. Beginning in the first quarter of 2020 we instituted a travel and entertainment expense freeze and other discretionary expense reduction initiatives, and have begun re-aligning facilities and headcount in response to expected changes in demand. We also continue to expect savings from our restructuring and related activities and to invest in restructuring and related actions as appropriate; however, the timing of certain restructuring activities planned for 2020 may be delayed.

Our net cash flows provided by operating activities were strong in the first quarter of 2020; however, as a precautionary measure, in order to preserve financial flexibility and liquidity in light of disruption in the global markets resulting from the COVID-19 pandemic, we borrowed $100 million from our revolving credit facility in March 2020 and an additional $125 million in April 2020. As another precautionary measure, we also anticipate limiting our capital expenditures to only essential investments in 2020.



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Results of Operations – ThirdFirst Quarter of 20172020 compared to the ThirdFirst Quarter of 20162019
 
SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):
Three Months Ended September 30,Three Months Ended March 31,
2017
% of Net sales
2016
% of Net sales
2020
% of Net sales
2019
% of Net sales
Net sales$950.5
 
$907.4
 
$1,090.3
 
$1,087.3
 
Cost of goods sold643.6
67.7%618.7
68.2%776.8
71.2%780.0
71.7%
Gross profit306.9
32.3%288.7
31.8%313.5
28.8%307.3
28.3%
Selling & administrative ("S&A") expense160.5
16.9%152.7
16.8%194.7
17.9%186.4
17.1%
Operating income146.4
15.4%136.0
15.0%118.8
10.9%120.9
11.1%
Net income attributable to Hubbell80.8
8.5%86.7
9.6%
Net income attributable to Hubbell Incorporated75.0
6.9%72.3
6.6%
EARNINGS PER SHARE – DILUTED$1.47
 
$1.56
 
$1.37
 
$1.32
 


Our consolidatedIn the following discussion of results of operations, in the three and nine months ending September 30, 2017 and 2016 include what we refer to as "Restructuring and Related Costs." Restructuring actions support our cost reduction efforts involving the consolidation of manufacturing and distribution facilities as well as workforce reductions and the sale or exit of business units we determine to be non-strategic. Restructuring costs include severance and employee benefits, asset impairments, as well as facility closure, contract termination and certain pension costs that are directly related to restructuring actions. Restructuring-related costs are costs associated with our business transformation initiatives, including the consolidation of back-office functions and streamlining our processes, and certain other costs and gains associated with restructuring actions.

Our consolidated results of operations in 2017 also include a $10.1 million pre-tax loss on the early extinguishment of long-term debt from the redemption of all of our $300 million outstanding long-term unsecured, unsubordinated notes that were scheduled to mature in 2018.
"adjusted" operating measures. We believe those adjusted measures, which exclude the impact of certain non-GAAP measures that exclude these itemscosts, gains and losses, may provide investors with useful information regarding our underlying performance from period to period and allow investors to assess the impact of the Company's restructuring and related activities and business transformation initiatives on theunderstand our results of operations.operations without regard to items we do not consider a component of our core operating performance. Adjusted gross profit, adjusted selling & administrative ("S&A") expense, and adjusted operating income eachmeasures for the periods presented herein exclude Restructuring and Related Costs. Adjusted net income attributable to Hubbell and adjusted earnings per diluted share exclude Restructuring and Related Costs as well as the loss on early extinguishmentamortization of long-term debt.intangible assets associated with all of our business acquisitions, including inventory step-up amortization associated with those acquisitions. Management uses these adjusted measures when assessing the performance of the business.

The following table reconciles our restructuring costs to our Restructuring and Related Costs for the three months ended September 30, 2017 and 2016 (in millions):
 Three Months Ended September 30,
 20172016 20172016 20172016
 Cost of goods sold S&A expense Total
Restructuring costs (See Note 15 - Restructuring Costs)$2.2
$4.2
 $1.1
$0.3
 $3.3
$4.5
Restructuring related costs0.5
0.1
 2.0
1.3
 2.5
1.4
Restructuring and related costs (non-GAAP measure)$2.7
$4.3
 $3.1
$1.6
 $5.8
$5.9

Of the $5.8 million of Restructuring and Related Costs incurred in the third quarter of 2017, $4.7 million is recorded in the Electrical segment and $1.1 million is recorded in the Power segment. Of the $5.9 million of Restructuring and Related Costs incurred in the third quarter of 2016, $5.2 million is recorded in the Electrical segment and $0.7 million is recorded in the Power segment.

Our full year 2017 earnings per diluted share expectation anticipates (each net of tax) approximately $0.30 of Restructuring and Related Costs, of which $0.07 has been incurred in the third quarter of 2017 and $0.26 has been incurred the first nine months of 2017.










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The following table reconciles our adjusted financial measures to the directly comparable GAAP financial measure (in millions, except per share amounts):

Three Months Ended September 30,Three Months Ended March 31,
2017
% of Net sales2016
% of Net sales2020
% of Net sales2019
% of Net sales
Gross profit (GAAP measure)$306.9
32.3%$288.7
31.8%$313.5
28.8%$307.3
28.3%
Restructuring and related costs2.7
 4.3
 
Amortization of acquisition-related intangible assets6.9
 6.1
 
Adjusted gross profit$309.6
32.6%$293.0
32.3%$320.4
29.4%$313.4
28.8%
    
S&A expenses (GAAP measure)$160.5
16.9%$152.7
16.8%$194.7
17.9%$186.4
17.1%
Restructuring and related costs3.1
 1.6
 
Amortization of acquisition-related intangible assets12.6
 12.1
 
Adjusted S&A expenses$157.4
16.6%$151.1
16.7%$182.1
16.7%$174.3
16.0%
    
Operating income (GAAP measure)$146.4
15.4%$136.0
15.0%$118.8
10.9%$120.9
11.1%
Restructuring and related costs5.8
 5.9
 
Amortization of acquisition-related intangible assets19.5
 18.2
 
Adjusted operating income$152.2
16.0%$141.9
15.6%$138.3
12.7%$139.1
12.8%
    
Net income attributable to Hubbell (GAAP measure)$80.8
 $86.7
 
Restructuring and related costs, net of tax3.9
 4.0
 
Loss on extinguishment of debt, net of tax6.3
 —
 
Adjusted net income attributable to Hubbell$91.0
 $90.7
 
Net income attributable to Hubbell Incorporated (GAAP measure)$75.0
 $72.3
 
Amortization of acquisition-related intangible assets, net of tax14.6
 13.6
 
Adjusted net income attributable to Hubbell Incorporated$89.6
 $85.9
 
Less: Earnings allocated to participating securities(0.3) (0.3) (0.3) (0.3) 
Adj. net income available to common shareholders$90.7
 $90.4
 
Adjusted net income available to common shareholders$89.3
 $85.6
 
Average number of diluted shares outstanding54.9
 55.5
 54.6
 54.6
 
ADJUSTED EARNINGS PER SHARE – DILUTED$1.65
 
$1.63


$1.64
 
$1.57




Net Sales


Net sales of $950.5 million$1.09 billion in the thirdfirst quarter of 20172020 increased five percentby $3.0 million compared to the thirdfirst quarter of 20162019. Organic net sales were approximately flat; slightly higher due to higher organicfavorable price realization that was largely offset by the effect of lower unit volume which includes a modest volume impact from COVID-19 disruptions due to the temporary closure of manufacturing locations and the contribution of acquisitions. Organic volume, including the impact of pricing headwinds,project delays. Net sales added approximately four percentage points toby acquisitions was offset by lower net sales and acquisitions contributed one percentage point.from the disposal of our Haefely business. These results, however, were mixed by segment as net sales of our Utility Solutions segment grew by 5.9% on strong organic growth while net sales of our Electrical segment declined by 3.8% reflecting notably weaker end market conditions, as further discussed in the section below captioned "Segment Results".
 

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Cost of Goods Sold

As a percentage of net sales, cost of goods sold decreased by 50 basis points to 67.7%71.2% in the thirdfirst quarter of 20172020, as compared to 68.2%71.7% in the thirdfirst quarter of 2016.2019. The decreaseimprovement was primarily due to gains from productivity in excess of cost inflation, greater realizeddriven by favorable price realization and savings from our productivity initiatives that outpaced cost increases, partially offset by the effects of COVID-19, as well as higher restructuring and related actionscosts, and higher amortization of acquisition-related intangible assets. The effects of COVID-19 in the quarter were primarily related to lower Restructuringabsorption of manufacturing costs due to temporary closure of a limited number of manufacturing locations and Related Costs, partially offset by price and material cost headwinds as well as a 40 basis point headwindinefficiencies from acquisitions.the delay of certain installation projects in our Aclara business group.


Gross Profit
 
The gross profit margin in the thirdfirst quarter of 20172020 increased by 50 basis points to 32.3%28.8% of net sales as compared to 31.8%28.3% in the thirdfirst quarter of 2016. Restructuring and Related Costs in Cost2019. Excluding amortization of goods soldacquisition-related intangible assets, the adjusted gross profit margin was 29.4% in the thirdfirst quarter of 2017 decreased by $1.6 million2020 as compared to 28.8% in the same period of the prior year. Excluding Restructuring and Related Costs, the adjusted gross profit margin was 32.6% in the third quarter of 2017 as compared to 32.3% in the third quarter of 2016. The increase in the adjusted gross profit margin was primarily due to gains from productivity in excess of cost inflationreflects favorable price realization and greater realized savings from our productivity initiatives that outpaced cost increases, partially offset by the effects of the COVID-19 pandemic, and higher restructuring and related actions, partially offset by pricecosts. The effects of COVID-19 in the quarter were primarily related to lower absorption of manufacturing costs due to temporary closure of a limited number of manufacturing locations and material cost headwindsinefficiencies from the delay of certain installation projects in our Aclara business group, as well as acquisitions, which reduced the adjusted gross profit margin by approximately 40 basis points in the third quartervolume impact of 2017.those disruptions.


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Selling & Administrative Expenses

S&A expense in the thirdfirst quarter of 20172020 was $160.5$194.7 million as compared to $152.7and increased by $8.3 million in the same period of the prior year. Restructuring and Related Costs in S&A expense in the third quarter of 2017 were $1.5 million higher as compared to the same period of the prior year.year period. S&A expense as a percentage of net sales increased by 1080 basis points to 16.9%17.9% in the thirdfirst quarter of 2017.2020. Excluding Restructuring and Related Costs,amortization of acquisition-related intangible assets, adjusted S&A expense as a percentage of net sales declinedalso increased by 1070 basis points to 16.6%16.7% in the thirdfirst quarter of 2017 primarily due to higher net sales volume and greater realized savings from our restructuring and related actions, partially offset by acquisitions, which increased the adjusted2020. The increase in S&A expense as a percentage of net sales is primarily due to the timing of stock-based compensation expense associated with our annual grant, which shifted from the fourth quarter to the first quarter, as well as an increase in our reserves for bad debt expense that reflects our current estimate for higher future credit losses due to customer liquidity issues driven by approximately 20 basis points.the recent downturn in economic conditions.

Total Other Expense
 
Total other expense was $22.8decreased by $4.0 million in the thirdfirst quarter of 20172020 to $18.9 million primarily due to lower interest expense from a reduction in principal amount of borrowings outstanding under our Term Loan Agreement (as defined below), as well as lower non-service pension costs as compared to $11.9 million in the third quartersame period of 2016. The increase was primarily due to a $10.1 million pre-tax loss on the early extinguishment of long-term debt recognized in the third quarter of 2017 from the redemption of all of our $300 million outstanding long-term notes that were scheduled to mature in 2018.2019.


Income Taxes
 
The effective tax rate in the thirdfirst quarter of 2017 increased2020 decreased to 33.0%24.2% from 29.0%24.7% in the thirdfirst quarter of 2016. The increase is2019 primarily attributabledue to favorable returna net year over year benefit related to provisionthe income tax effects of exercised and other discrete items in the prior year that did not repeat in the current year and unfavorable earnings mix in jurisdictions with higher tax rates in the third quarter of 2017.vested share-based compensation awards.


Net Income Attributable to Hubbell Incorporated and Earnings Per Diluted Share
 
Net income attributable to Hubbell Incorporated was $80.8$75.0 million in the thirdfirst quarter of 20172020 and decreased seven percent as compared to the third quarter of 2016. Excluding Restructuring and Related Costs and the loss on debt extinguishment, adjusted net income attributable to Hubbell was $91.0 million in the third quarter of 2017 and was flat as compared to the third quarter of the prior year. Earnings per diluted share in the third quarter of 2017 decreased six percent as compared to the third quarter of 2016. Adjusted earnings per diluted share in the third quarter of 2017 increased one percent as compared to the third quarter of 2016 and reflects the decline in the average number of diluted shares outstanding of 0.6 million3.7% as compared to the same period of the prior year. Excluding amortization of acquisition-related intangibles, adjusted net income attributable to Hubbell Incorporated was $89.6 million in the first quarter of 2020 and increased by 4.3% as compared to the first quarter of 2019 primarily as a result of lower non-operating costs such as interest expense and non-service pension costs, as well as a decrease in the effective tax rate. Earnings per diluted share in the first quarter of 2020 increased 3.8% percent as compared to the first quarter of 2019. Adjusted earnings per diluted share in the first quarter of 2020 increased by 4.5%% as compared to the first quarter of 2019.



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Segment Results


ELECTRICAL

Three Months Ended September 30,Three Months Ended March 31,
(In millions)2017
2016
2020
2019
Net sales$654.0
$634.6
$606.1
$630.2
Operating income$85.6
$80.9
Restructuring and related costs4.7
5.2
Operating income (GAAP measure)58.0
68.6
Amortization of acquisition-related intangible assets6.4
5.7
Adjusted operating income$90.3
$86.1
$64.4
$74.3
Operating margin13.1%12.7%
Operating margin (GAAP measure)9.6%10.9%
Adjusted operating margin13.8%13.6%10.6%11.8%
 
Net sales in the Electrical segment in the thirdfirst quarter of 20172020 were $654.0$606.1 million, up approximately three percentand declined by $24.1 million, or 3.8%, as compared to the thirdfirst quarter of 20162019. Organic net sales declined by approximately three percentage points due to higher organiclower unit volume includingthat was only partially offset by the impacteffect of pricing headwinds,favorable price realization. Net sales in the first quarter of 2020 also declined by approximately one percentage point from the effect of acquisitions and dispositions, as the contributiondecline from the disposal of the Haefely business was greater than net sales fromadded by our fourth quarter 2019 acquisitions. Organic volume, including the impact of pricing headwinds, added two percentage points and acquisitions added one percentage point.


Within the segment, the aggregate net sales of our Commercial and Industrial and Construction and Energy business groups increaseddecreased by sixapproximately one percentage points,point, primarily due to four percentage pointsthe effect of organic growth, driven primarily byacquisitions and dispositions (as noted above). Organic net sales growthwere only slightly higher as the effect of our harsh and hazardous products serving the energy-related markets, and two percentage points offavorable price realization was largely offset by lower net sales growth from acquisitions.volume. Net sales of our Lighting business group decreased two percent in the third quarter of 2017 primarily due to headwinds from pricing as organic volume was higher, by less than one percent. Within the Lighting business group, organic net sales of residential products and commercial and industrial lighting products each declined by twoapproximately nine percentage points.

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Operating income in the Electrical segment for the third quarter of 2017 was $85.6 million and increased six percent compared to the third quarter of 2016. Operating margin in the third quarter of 2017 increased by 40 basis points to 13.1% as compared to the same period of 2016. Excluding Restructuring and Related Costs, the adjusted operating margin increased by 20 basis points to 13.8%. The increase in the adjusted operating margin is primarily due to greater realized savings from our restructuring and related actions as well as incremental earnings from higher net sales volume. The favorable impact of those items was partially offset by acquisitions, which reduced the adjusted operating margin by approximately 80 basis points in the third quarter of 2017, as well as price erosion and material and inflationary costs in excess of productivity gains.

POWER

Three Months Ended September 30,
(In millions)2017
2016
Net sales$296.5
$272.8
Operating income$60.8
$55.1
Restructuring and related costs1.1
0.7
Adjusted operating income$61.9
$55.8
Operating margin20.5%20.2%
Adjusted operating margin20.9%20.5%
Net sales in the Power segment in the third quarter of 2017 were $296.5 million, up nine percent as compared to the third quarter of 2016, primarily due to higher organic volume and the net sales contribution from acquisitions. Organic volume added approximately eight percentage points, driven by growth in the distribution and transmission markets including storm-related sales associated with recent hurricanes, and acquisitions contributed one percentage point to net sales growth.

Operating income in the Power segment increased ten percent to $60.8 million in the third quarter of 2017. Operating margin in the third quarter of 2017 increased by 30 basis points to 20.5% as compared to the same period of 2016. Excluding Restructuring and Related Costs, the adjusted operating margin was 20.9% in the third quarter of 2017 and increased by 40 basis points as compared to the same period of 2016 as gains from productivity initiatives in excess of cost inflation and incremental earnings from higher net sales volume were partially offset by price and material cost headwinds.

Results of Operations – Nine Months Ended September 30, 2017 compared to the Nine Months Ended September 30, 2016
SUMMARY OF CONSOLIDATED RESULTS (IN MILLIONS, EXCEPT PER SHARE DATA):
     
 Nine Months Ended September 30,
 2017
% of Net sales
2016
% of Net sales
Net sales$2,751.1
 
$2,651.0
 
Cost of goods sold1,887.7
68.6%1,808.9
68.2%
Gross profit863.4
31.4%842.1
31.8%
Selling & administrative expense482.3
17.5%472.1
17.8%
Operating income381.1
13.9%370.0
14.0%
Net income attributable to Hubbell222.7
8.1%228.6
8.6%
EARNINGS PER SHARE – DILUTED$4.02
 
$4.08
 

The following table reconciles our restructuring costs to our Restructuring and Related Costs for the nine months ended September 30, 2017 and 2016 (in millions):
 Nine Months Ended September 30,
 20172016 20172016 20172016
 Cost of goods sold S&A expense Total
Restructuring costs (See Note 15 - Restructuring Costs)$9.6
$8.3
 $3.9
$5.6
 $13.5
$13.9
Restructuring related costs1.3
1.8
 5.7
3.3
 7.0
5.1
Restructuring and related costs (non-GAAP measure)$10.9
$10.1
 $9.6
$8.9
 $20.5
$19.0


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Of the $20.5 million of Restructuring and Related Costs incurred in the first nine months of 2017, $16.6 million is recorded in the Electrical segment and $3.9 million is recorded in the Power segment. Of the $19.0 million of Restructuring and Related Costs incurred in the first nine months of 2016, $16.7 million is recorded in the Electrical segment and $2.3 million is recorded in the Power segment.

The following table reconciles our adjusted financial measures to the directly comparable GAAP financial measure (in millions, except per share amounts):

 Nine Months Ended September 30,
 2017
% of Net sales2016
% of Net sales
Gross profit (GAAP measure)$863.4
31.4%$842.1
31.8%
Restructuring and related costs10.9
 10.1
 
Adjusted gross profit$874.3
31.8%$852.2
32.1%
     
S&A expenses (GAAP measure)$482.3
17.5%$472.1
17.8%
Restructuring and related costs9.6
 8.9
 
Adjusted S&A expenses$472.7
17.2%$463.2
17.5%
     
Operating income (GAAP measure)$381.1
13.9%$370.0
14.0%
Restructuring and related costs20.5
 19.0
 
Adjusted operating income$401.6
14.6%$389.0
14.7%
     
Net income attributable to Hubbell (GAAP measure)$222.7
 $228.6
 
Restructuring and related costs, net of tax13.9
 12.9
 
Loss on extinguishment of debt, net of tax6.3
 —
 
Adjusted net income attributable to Hubbell$242.9
 $241.5
 
Less: Earnings allocated to participating securities(0.8) (0.7) 
Adj. net income available to common shareholders$242.1
 $240.8
 
Average number of diluted shares outstanding55.2
 55.8
 
ADJUSTED EARNINGS PER SHARE – DILUTED$4.39
 
$4.31



Net Sales
Net sales of $2.8 billion for the first nine months of 2017 increased four percent compared to the first nine months of 2016 primarily due to higher organic volume and the contribution of net sales from acquisitions. Organic volume, including the impact of pricing headwinds, contributed two percentage points and acquisitions contributed two percentage points to net sales growth.
Cost of Goods Sold
As a percentage of net sales, cost of goods sold increased to 68.6% for the first nine months of 2017 compared to 68.2% for the first nine months of 2016. The increase was primarily due to price and material cost headwinds as well as a 20 basis point headwind from acquisitions and higher Restructuring and Related Costs, partially offset by gains from productivity initiatives that exceeded cost inflation and greater realized savings from our restructuring and related actions.
Gross Profit
The gross profit margin was 31.4% in the first nine months of 2017 compared to 31.8% in the first nine months of 2016. Restructuring and Related Costs in Cost of goods sold in the first nine months of 2017 were $0.8 million higher as compared to the same period of the prior year. Excluding Restructuring and Related Costs, the adjusted gross profit margin was 31.8% in the first nine months of 2017 as compared to 32.1% in the same period of the prior year. The decrease in the adjusted gross profit margin was primarily due to price and material cost headwinds as well as a 20 basis point headwind from acquisitions, partially offset by gains from productivity initiatives that exceeded cost inflation and greater realized savings from our restructuring and related actions.





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Selling & Administrative Expenses

S&A expense in the first nine months of 2017 was $482.3 million and increased by $10.2 million compared the same period of the prior year. S&A expense as a percentage of net sales declined by 30 basis points to 17.5% in the first nine months of 2017. Excluding Restructuring and Related Costs, adjusted S&A expense as a percentage of net sales also declined by 30 basis points to 17.2% in the first nine months of 2017 primarily due to higher net sales volume and greater realized savings from our restructuring and related actions, partially offset by acquisitions, which increased the adjusted S&A expense as a percentage of net sales by approximately 10 basis points.

Total Other Expense

Total other expense was $49.9 million in the first nine months of 2017 compared to $37.5 million in the first nine months of 2016. The increase was primarily due to a $10.1 million pre-tax loss on the early extinguishment of long-term debt recognized in the third quarter of 2017 from the redemption of all of our $300 million outstanding long-term notes that were scheduled to mature in 2018, in addition we incurred higher interest expense in the first nine months of 2017 and higher foreign exchange losses in the first nine months of 2017. Those increases were partially offset by the write-off of an escrow receivable in the second quarter of 2016 associated with a prior acquisition. This write off had no effect on net income of the prior year as it was offset in income taxes by the release of a related liability.
Income Taxes

The effective tax rate in the first nine months of 2017 increased to 31.3% from 30.2% in the first nine months of 2016. The increase is primarily attributable to return to provision and other discrete favorable items in the prior year that did not repeat in the current year, including the release of a liability in the second quarter of 2016 caused by the expiration of certain statutes associated with an uncertain tax position from a prior acquisition, partially offset by a favorable settlement of a tax examination in the first quarter of 2017.
Net Income Attributable to Hubbell and Earnings Per Diluted Share

Net income attributable to Hubbell was $222.7 million in the first nine months of 2017 compared to $228.6 million in the first nine months of 2016. Excluding Restructuring and Related Costs and the loss on debt extinguishment, adjusted net income attributable to Hubbell was $242.9 million in the first nine months of 2017 and increased one percent2020 as compared to the first nine months of the prior year. Earnings per diluted share in the first nine months of 2017 decreased one percent as compared to the first nine months of 2016. Adjusted earnings per diluted share in the first nine months of 2017 increased two percent as compared to the first nine months of 2016 and reflects a decline in the average number of diluted shares outstanding of 0.6 million as compared to the same period of the prior year.
Segment Results
ELECTRICAL
 Nine Months Ended September 30,
(In millions)2017
2016
Net sales$1,897.9
$1,858.7
Operating income$206.6
$213.5
Restructuring and related costs16.6
16.7
Adjusted operating income$223.2
$230.2
Operating margin10.9%11.5%
Adjusted operating margin11.8%12.4%
Net sales in the Electrical segmentlower unit volumes were $1.9 billion in the first nine months of 2017 and increased by approximately two percent compared to the first nine months of 2016 due to two percentage points of net sales growth from higher organic volume, including the impact of pricing headwinds, and one percentage point contributed by acquisitions. Headwinds from foreign currency translation were less than one percentage point.

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Within the segment, the aggregate net sales of our Commercial and Industrial and Construction and Energy business groups increased by four percentage points, due to three percentage points of organic growth, driven primarily by net sales growth of our harsh and hazardous products serving the energy-related markets as well as our products serving the non-residential construction market, and one percentage point of net sales growth from acquisitions. Net sales of our Lighting business group decreased one percent in the first nine months of 2017 with two percentage points of headwind from pricing,only partially offset by one percentage point of volume growth.favorable price realization. Within the Lighting business group, net sales of commercial and industrial lighting products decreased by approximately 16%, driven by continued lower overall market demand, and net sales of residential lighting products increased by four percent, while netapproximately 12%. Net sales ofresults were mixed by end market, as weakness in commercial and industrial lighting, products declinedheavy industrial, and gas distribution markets was partially offset by three percentage points, primarily due to headwinds on pricing.strong growth in residential and certain light industrial markets.


Operating income in the Electrical segment for the first nine monthsquarter of 20172020 was $206.6$58.0 million and decreased three percentapproximately 15% compared to the same periodfirst quarter of 2016. Operating2019, while operating margin in the first nine monthsquarter of 20172020 decreased by 60130 basis points to 10.9%9.6%. Excluding amortization of acquisition-related intangibles, adjusted operating income decreased 13% and the adjusted operating margin decreased by 120 basis points to 10.6%. The decrease in operating income and margin in the first quarter of 2020 is primarily due to lower unit volume, higher stock based compensation expense due to the change in timing of our annual grant, the effects of the COVID-19 pandemic, an increase in our reserves for bad debt expense, and higher restructuring and related costs as compared to the first quarter of 2019. These items were partially offset by favorable price realization and savings from our productivity initiatives that outpaced cost increases.

The effects of the COVID-19 pandemic in the first quarter of 2020 were primarily related to lower absorption of manufacturing costs due to the temporary closure of a limited number of manufacturing locations.


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UTILITY SOLUTIONS
 Three Months Ended March 31,
(In millions)2020
2019
Net sales$484.2
$457.1
Operating income (GAAP measure)60.8
52.3
Amortization of acquisition-related intangible assets13.1
12.5
Adjusted operating income$73.9
$64.8
Operating margin (GAAP measure)12.5%11.4%
Adjusted operating margin15.3%14.2%
Net sales in the Utility Solutions segment in the first quarter of 2020 were $484.2 million, up approximately six percent as compared to the first quarter of 2019. Organic net sales increased by approximately five percentage points due primarily to higher unit volume and favorable price realization. Acquisitions contributed approximately one and one-half percentage points to net sales growth and foreign exchange was slightly unfavorable. The decline in organic unit volume includes just over one-half percentage point due to the effect of COVID-19 disruptions.

Within the Utility Solutions segment, net sales of our Power Systems business group in the first quarter of 2020 increased by approximately 12% as compared to the prior year driven by domestic demand in the utility transmission and distribution markets. Net sales of the Aclara business group in the first quarter of 2020 decreased by approximately 4% as compared to the prior year driven by lower demand in the domestic meters business, which experienced a strong first quarter of 2019 due to the timing of projects, and lower net sales from the delay of certain installation projects due to COVID-19, partially offset by growth in AMI business in electrical and water markets.

Operating income in the Utility Solutions segment for the first quarter of 2020 increased 16.2% to $60.8 million as compared to the same period of 2016. Excluding Restructuring and Related Costs, the adjusted operating margin also decreased by 60 basis points to 11.8%. The decrease in the adjusted operating margin is primarily due to price and material cost headwinds and acquisitions. Acqusitions reduced the adjusted operating margin by approximately 50 basis points in the third quarter of 2017. The unfavorable impact of those items was partially offset by greater realized savings from our restructuring and related actions.
POWER
 Nine Months Ended September 30,
(In millions)2017
2016
Net sales$853.2
$792.3
Operating income$174.5
$156.5
Restructuring and related costs3.9
2.3
Adjusted operating income$178.4
$158.8
Operating margin20.5%19.8%
Adjusted operating margin20.9%20.0%

Net sales in the Power segment in the first nine months of 2017 were $853.2 million, up approximately eight percent as compared to the first nine months of 2016 primarily due to higher organic volume and the net sales contribution from acquisitions. The increase in organic volume contributed five percentage points driven by growth in the distribution and telecommunications markets including storm-related sales associated with recent hurricanes, and acquisitions contributed three percentage points to net sales growth.

Operating income in the Power segment increased twelve percent to $174.5 million in the first nine months of 2017.2019. Operating margin in the first nine monthsquarter of 20172020 increased by 70 basis points to 20.5%12.5% as compared to 11.4% in the same period of 2016.2019. Excluding Restructuring and Related Costs,amortization of acquisition-related intangibles, the adjusted operating margin increased by 90110 basis points to 20.9% in the first nine months of 2017. The increase in the adjusted operating margin is15.3%, primarily due to gains from productivity initiatives in excess of cost inflation as well as from incremental earnings ondriven by higher net sales volume, as well as favorable price realization and productivity that outpaced cost increases. Those favorable items were partially offset by pricehigher stock based compensation expense due to the change in timing of our annual grant, and materialthe effects of the COVID-19 pandemic, which were primarily related to cost headwinds.

Outlook

2017

In 2017, we continue to expect end market growthinefficiencies from the delay of certain installation projects in the range of two and a half to three percentour Aclara business. The increase in the aggregate, including two to three percent growth in the electrical transmission and distribution as well as the industrial market, two to four percent growth in the non-residential and oil and gas markets, and four to five percent growth in the residential market. Our acquisitions are expected to contribute approximately two percent of net sales growth in 2017.

In the first half of 2017, we invested in IoT engineering and research and development resources through the acquisition of iDevices, which adds important capabilities for further enhancing our products, but we expect will be dilutive to our operating margin in 2017.

We expect recent hurricanes will impact our operating income in 2017was also partially offset by providing a benefit from storm-related sales and headwind from a temporary outagean increase in our manufacturing facility in Vega Baja, Puerto Rico.reserves for bad debt expense.

We estimate 2017 earnings per diluted share will be within a range of $5.40 to $5.50, including approximately $0.30 of Restructuring and Related Costs and an $0.11 loss on the early extinguishment of debt. We continue to expect free cash flow (defined as cash flows from operating activities less capital expenditures) equal to net income attributable to Hubbell in 2017.








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2018

In 2018, we expect our end markets to grow by approximately two to four percent in aggregate and that the trend toward more consistent growth in our end markets will continue. We expect our operating margin in 2018 will benefit from lower restructuring spend, incremental savings from restructuring and related actions, and the absence of restructuring-driven inefficiencies within our Lighting business group. Our net income is also expected to benefit from lower interest costs resulting from the refinancing of our long-term debt that was due in 2018 and we are targeting a return to double digit growth in diluted earnings per share in 2018.




Financial Condition, Liquidity and Capital Resources
 


Cash Flow
Nine Months Ended September 30,Three Months Ended March 31
(In millions)2017
2016
2020
2019
Net cash provided by (used in): 
 
 
 
Operating activities$228.6
$269.2
$108.4
$78.1
Investing activities(161.6)(219.3)(15.6)(20.1)
Financing activities(139.9)(14.3)35.7
(43.7)
Effect of foreign currency exchange rate changes on cash and cash equivalents21.7
(14.6)(10.5)2.0
NET CHANGE IN CASH AND CASH EQUIVALENTS$(51.2)$21.0
$118.0
$16.3


Cash provided by operating activities for the ninethree months ended September 30, 2017March 31, 2020 was $228.6$108.4 million compared to $269.2cash provided by operating activities of $78.1 million infor the same period in 2016 and decreased2019 primarily due to a higher net income and the related non-cash adjustment for stock based compensation as well as an increaseimprovement in net working capital primarily related to reductions in inventory, during 2017partially offset by higher accounts receivable balances. The increase from stock-based compensation is due to meet increased demand, and the timing of other payments.our annual equity grants, which has been shifted from the fourth quarter to the first quarter.
 
Cash used for investing activities was $161.6$15.6 million in the ninethree months ended September 30, 2017March 31, 2020 compared to cash used of $219.3$20.1 million during the comparable period in 20162019, and primarily reflects decreasedreductions in cash used for acquisitions.capital expenditures.
 
Cash usedprovided by financing activities was $139.9$35.7 million in the ninethree months ended September 30, 2017March 31, 2020 as compared to cash providedused of $14.3$43.7 million in the samecomparable period of 2016.2019. The increasechange in cash used forflows from financing activities reflects lower cash provided by long-termthe proceeds of $100 million of borrowings under the 2018 Credit Facility (as defined below) and issuances of commercial paper, partially offset by a $154.2$31.3 million decreaseincrease in cash used for the repurchase of Common Stock in 2017 and approximately $91 million of net short-term borrowings in the nine months ended September 30, 2017 as compared to approximately $48 million of net short-term repayments in the same period of the prior year.share repurchases during 2020.


The favorableunfavorable impact of foreign currency exchange rates on cash was $21.7$10.5 million infor the ninethree months ended September 30, 2017March 31, 2020 and is primarily related to strengtheningweakness in the British Pound,Mexican Peso, Canadian Dollar and Australian DollarBrazilian Real versus the U.S. Dollar in the nine months ended September 30, 2017.Dollar.
 
Investments in the Business
 
Investments in our business include cash outlays for the acquisition of businesses as well as expenditures to support our restructuring and related activities and to maintain the operation of our equipment and facilities.facilities and invest in restructuring activities.
During the first nine months of 2017, the Company completed four acquisitions with an aggregate purchase price of $100.3 million, net of cash received. In April 2017, the Company acquired all of the issued and outstanding limited liability company interestsWe continue to invest in iDevices, LLC ("iDevices") for $59.2 million. iDevices is a developer with embedded firmware and application development expertise with custom-built Internet of Things ("IoT") Cloud infrastructure. iDevices has been allocated to the Electrical segment. In April 2017, the Company also acquired substantially all of the assets of Advance Engineering Corporation and related companies (collectively "AEC") for $31.6 million. AEC is a gas components manufacturer that complements the Company's existing business in the natural gas distribution vertical. AEC has been added to the Electrical segment. The Company also completed two acquisitions that have been added to the Power segment in the first quarter of 2017 for $9.5 million, net of cash received. See also Note 2 — Business Acquisitions and our discussion of the 2017 Outlook in Management's Discussion and Analysis of Financial Condition and Results of Operations.

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Beginning in the fourth quarter of 2014 and continuing through the third quarter of 2017 we have initiated certain restructuring and related actions, primarilyprograms to align ourmaintain a competitive cost structure, withto drive operational efficiency and to mitigate the needsimpact of rising material costs and administrative cost inflation. We expect our business and alsoinvestment in response to conditions in certain of our end markets. As a result of those restructuring and related activities in 2020 to continue as we continue to invest in previously initiated actions we have exited a totaland initiate further footprint consolidation and other cost reduction initiatives; however, due to potential disruptions arising from the COVID-19 pandemic, the timing of 26 manufacturing and warehousing facilities.

those activities may be delayed.
In connection with our restructuring and related actions, we have incurred restructuring costs as defined by U.S. GAAP, which are primarily severance and employee benefits, asset impairments, accelerated depreciation, as well as facility closure, contract termination and certain pension costs that are directly related to restructuring actions. TheseWe also incurred restructuring-related costs, which are costs associated with our business transformation initiatives, including the consolidation of back-office functions and streamlining of our processes, and certain other costs and gains associated with restructuring actions. We refer to these costs on a combined basis as "restructuring and related costs", which is a non-GAAP measure. We believe this non-GAAP measure provides investors with useful information regarding our underlying performance from period to period.

Restructuring costs are predominantly settled in cash from our operating activities and are generally settled within one year, with the exception of asset impairments, which are non-cash. Restructuring costs in 2016 also included a $12.5 million charge



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The table below presents the restructuring and related costs incurred in the first ninethree months of 2017,2020, additional expected restructuring costs, and the expected completion date of restructuring actions that have been initiated as of March 31, 2020 and in prior years (in millions):
 Costs incurred in the nine months ended September 30, 2017Additional expected costsExpected completion date
2017 Restructuring Actions$8.4
$3.7
2018
2016 Restructuring Actions (a)
5.1
3.1
2017
Total$13.5
$6.8
 
 
Costs incurred in the three months ended
March 31, 2020

Additional expected costs
Expected completion date
2020 Restructuring Actions$1.2
$0.5
2021
2019 and Prior Restructuring Actions2.3
9.1
2020
Total Restructuring cost (GAAP measure)$3.5
$9.6
 
Restructuring-related costs2.1
1.2
 
Restructuring and related costs (Non-GAAP)$5.6
$10.8
 
(a) Additional expected costs does not include any potential future liability, in excess of amounts already recognized in 2016, associated with the anticipated withdrawal from the multi-employer pension plan referred to in the preceding paragraph. Additional information about the estimated withdrawal liability associated with that multi-employer plan is included in Note 10 — Retirement Benefits in the Notes to Consolidated Financial Statements in the Hubbell Incorporated Annual Report on Form 10-K for the year ended December 31, 2016.

In connection with our restructuring and related actions we also incur restructuring-related costs. Restructuring-related costs are costs associated with our business transformation initiatives, including the consolidation of back-office functions and streamlining our processes, and certain other costs and gains associated with restructuring actions. We refer to restructuring costs (which is a GAAP measure) and restructuring-related costs on a combined basis as "Restructuring and Related Costs", which is a non-GAAP measure. Refer to the Results of Operations discussion within this Management's Discussion and Analysis of Financial Condition and Results of Operations, for further detail of the costs associated with our restructuring and related activities and reconciliations of our non-GAAP measures.


During the first ninethree months of 2017,2020, we invested $53.2$17.8 million forin capital expenditures, an increasea decrease of $7.4$5.5 million from the comparable period of 20162019 and primarily relatingwe anticipate capital spending to continue to be lower throughout 2020 as compared to the prior year as we limit our manufacturing productivity initiatives.2020 capital expenditures to essential investments as a result of the general slowdown in economic activity associated with the COVID-19 pandemic.


Stock Repurchase Program


At December 31, 2016, we had total remaining share repurchase authorization of $153.6 million under the repurchase program approved by our Board of Directors in August 2015. In the first six months of 2017, the Company repurchased shares for an aggregate purchase price of $92.6 million and that repurchase program expires in October, 2017. On October 20, 2017, the Board of Directors approved a new stock repurchase program (the “October 2017 program”) that authorized the repurchase of up to $400 million of Common Stockcommon stock and which expires on October 20, 2020. AsIn the first quarter of October 25, 2017,2020, the entire $400Company repurchased $41.3 million remains authorized forof shares of common stock and the remaining share repurchase underauthorization of the October 2017 program.program is $284 million as of March 31, 2020. Subject to numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market or privately negotiated transactions, which may include repurchases under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended. See also Item 2 - Issuer Purchases of Equity Securities for additional information.


Debt to Capital
 
At September 30, 2017March 31, 2020 and December 31, 2016, Long-term debt in2019, the Condensed Consolidated Balance Sheets was $986.7Company had $1,597.3 million and $990.5$1,506.0 million, respectively, of long-term unsecured, unsubordinated notes,debt outstanding, net of unamortized discount and the unamortized balance of capitalized debt issuance costs. At March 31, 2020 and December 31, 2019, the Company also had $37.5 million and $34.4 million, respectively of long-term debt classified as short-term on the Condensed Consolidated Balance Sheets, reflecting maturities due within the next twelve months.


Borrowings under Revolving Credit Facility

The Company has a five-year revolving credit agreement (the "2018 Credit Facility") with a syndicate of lenders that provides a $750 million committed revolving credit facility. Commitments under the 2018 Credit Facility may be increased (subject to certain conditions) to an aggregate amount not to exceed $1.250 billion. The interest rate applicable to borrowings under the 2018 Credit Facility is generally either the adjusted LIBOR plus an applicable margin (determined by a ratings-based grid) or the alternate base rate. The single financial covenant in the 2018 Credit Facility requires that total debt not exceed 65% of total capitalization as of the last day of each fiscal quarter of the Company. The 2018 Credit Facility expires in February 2023.

In August 2017,March, 2020, the Company completed a public debt offering of $300borrowed $100.0 million of long-term, unsecured, unsubordinated notes maturingunder the 2018 Credit Facility and in August 2027 and bearing interest at a fixed rate of 3.15% (the "2027 Notes"). Net proceeds from the issuance were $294.6 million after deducting the discount on the notes and offering expenses paid by the Company. In September 2017,April 2020, the Company appliedborrowed an additional $125.0 million. The current weighted average interest rate for the net proceeds fromCompany's borrowings under the 2027 Notes to redeem all2018 Credit Facility is 2.15%. Borrowings outstanding as of its $300 millionMarch 31, 2020 are classified within long-term debt in the Condensed Consolidated Balance Sheet. There were no borrowings outstanding at December 31, 2019.

Term Loan Agreement

The Company also has a Term Loan Agreement (the “Term Loan Agreement”) with a syndicate of long-term, unsecured, unsubordinated notes maturing in 2018 and bearing interest at a fixed rate of 5.95%. In connection with this redemption,lenders under which the Company recognized a loss on the early extinguishment of the 2018 Notes of $6.3borrowed $500 million on an after-tax basis.unsecured basis to partially finance the Aclara acquisition on February 2, 2018. The interest rate applicable to borrowings under the Term Loan Agreement is generally either adjusted LIBOR plus an applicable margin (determined by a ratings-based grid) or the alternate base rate. The sole financial covenant in the Term Loan Agreement requires that total debt not exceed 65% of total capitalization as of the last day of each fiscal quarter of the Company.



The principal amount of borrowings under the Term Loan Agreement amortize in equal quarterly installments of 5% per year in year one, 5% per year in year two, 7.5% per year in year three, 10% per year in year four, 10% per year in year five, and any remaining borrowings under the Term Loan Agreement are due and payable in full in February 2023. The Company may also make principal payments in excess of the amortization schedule at its discretion.

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The carrying value of borrowings outstanding under the Term Loan Agreement classified within long-term debt in the Condensed Consolidated Balance Sheets is $62.2 million and $71.6 million at March 31, 2020 and December 31, 2019, respectively. Pursuant to the contractual loan amortization schedule, $37.5 million and $34.4 million, respectively of borrowings under the Term Loan Agreement are classified as short-term within current liabilities in the March 31, 2020 and December 31, 2019 Condensed Consolidated Balance Sheets.

Unsecured Senior Notes

At September 30, 2017March 31, 2020 and December 31, 2019, long-term debt includes unsecured, senior notes in principal amounts of the Company's long-term unsecured, unsubordinated notes are $300 million due in 2022, $400 million due in 2026, and $300 million due in 2027.2027, $450 million due in 2028 (collectively, the "Notes"). The carrying value of the Notes, net of unamortized discount and the unamortized balance of capitalized debt issuance costs, was $1,435.1 million and $1,434.4 million at March 31, 2020 and December 31, 2019, respectively.


The Company's long-term unsecured, unsubordinated notes are fixed rate indebtedness,Notes are callable at any time with a make whole premiumat specified prices and are only subject to accelerated payment prior to maturity upon customary events of default, or upon a change in thecontrol triggering event of a default (including as a result of the Company's failure to meet certain non-financial covenants) underdefined in the indenture governing the notes, as modified by the supplemental indentures creating such notes, or upon a change in control event as defined in such indenture.supplemented. The Company was in compliance with all non-financial covenants (none of which are financial) as of September 30, 2017.March 31, 2020.

Short-term Debt

At September 30, 2017March 31, 2020 and December 31, 2016,2019 the Company had $93.8$106.7 million and $3.2$65.4 million, respectively, of short-term debt outstanding.outstanding composed of:


◦Commercial$65.0 million of commercial paper borrowings outstanding at September 30, 2017 were $87.0 million. There were noMarch 31, 2020 and $26.0 million of commercial paper borrowings outstanding at December 31, 2016.2019.


◦Short-term debt$37.5 million at September 30, 2017March 31, 2020 and $34.4 million at December 31, 2016 also includes $6.82019, respectively, of long-term debt classified as short-term within current liabilities in the Condensed Consolidated Balance Sheets, reflecting amortization within the next 12 months under the Term Loan Agreement.

◦$4.2 million at March 31, 2020 and $3.2$5.0 million at December 31, 2019, respectively, of borrowings to support our international operations in China and Brazil.China.


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)September 30, 2017
December 31, 2016
March 31, 2020
December 31, 2019
Total Debt$1,080.5
$993.7
$1,704.0
$1,571.4
Total Hubbell Shareholders’ Equity1,656.0
1,592.8
Total Hubbell Incorporated Shareholders’ Equity1,914.9
1,947.1
TOTAL CAPITAL$2,736.5
$2,586.5
$3,618.9
$3,518.5
Total Debt to Total Capital39%38%47%45%
Cash and Investments456.5
505.2
366.7
251.9
Net Debt$624.0
$488.5
$1,337.3
$1,319.5
Net Debt to Total Capital23%19%37%38%

Liquidity
 
We measure liquidity on the basis of our ability to meet short-term and long-term operational funding needs, to fund additional investments, including acquisitions, and to 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 2017,the first three months of 2020, we have invested in acquisitions and also returned capital to our shareholders throughby paying $49.5 million of dividends on our common stock and using $41.3 million of cash for share repurchases and shareholder dividends. Theserepurchases. Those activities were funded primarily fromwith cash flows from operations, with the exception of our April 2017 acquisitions that were fundedprovided by issuing commercial paper.operating activities.

◦In the first nine months of 2017, cash used for the acquisition of businesses, net of cash acquired was $110.3 million, including the settlement of purchase price installments from prior year acquisitions. Further discussion of our acquisitions can be found in Note 2 — Business Acquisitions.

◦
In the nine months ended September 30, 2017, cash settlements for share repurchases were $92.6 million. Shareholder dividends paid in the nine months ended September 30, 2017 were $115.5 million.


We also require cash outlays to fund our operations, our capital expenditures, and an increase in working capital that would be requiredrequirements to accommodate a higher levelanticipated levels of business activity, for the foreseeable future, as well as our rate of cash dividends, and potential future acquisitions in 2017. In October 2017, the Company’s Board of Directors approved an increase in the common stock dividend rate from $0.70 to $0.77 per share per quarter. The increased quarterly dividend payment will commence with the December 15, 2017 dividend payment made to shareholders of record on November 30, 2017.

acquisitions. We have contractual obligations for long-term debt, operating leases, purchase obligations, and certain other long-term liabilities that wereare summarized in athe table of Contractual Obligations in our Annual Report on Form 10-K for the year ended December 31, 2016. Since December 31, 2016, there were no material changes2019. As a result of the Tax Cuts and Job Act of 2017 ("TCJA"), we also have an obligation to our contractual obligations.fund, over the next six years, the Company's liability for the transition tax on the deemed repatriation of foreign earnings.





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Our sources of funds and available borrowing resources to meet these funding needs are as follows.follows:


◦Cash flows from operationsoperating activities and existing cash resources: We continueIn addition to target free cash flow (defined as cash flows from operations less capital expenditures) equal to net income in 2017. Weoperating activities, we also have $386.4had $300.0 million of cash and cash equivalents at September 30, 2017,March 31, 2020, of which approximately three percent48% was held inside of the United States and the remainder held internationally. Approximately $100 million of this liquidity held as of March 31, 2020 was provided by our recent borrowing under the 2018 Credit Agreement as described above and below.


◦We have the ability to issue commercial paper for general corporate purposes and ourOur 2018 Credit Facility provides a $750 million committed revolving credit facility which expiresand commitments under the 2018 Credit Facility may be increased (subject to certain conditions) to an aggregate amount not to exceed $1.250 billion. Annual commitment fees to support availability under the 2018 Credit Facility are not material. Although not the principal source of liquidity, we believe our 2018 Credit Facility is capable of providing significant financing flexibility at reasonable rates of interest and is an attractive alternative source of funding in December 2020, serves as a backup to ourthe event that commercial paper program.markets experience disruption, such as the recent disruption in that market due to general liquidity concerns associated with the recent economic downturn. However, an increase in usage of the 2018 Credit Facility related to growth or a significant deterioration in the results of our operations or cash flows, could cause our borrowing costs to increase and/or our ability to borrow could be restricted. We maintain investment grade credit ratings from the major U.S. rating agencies.have not entered into any guarantees that could give rise to material unexpected cash requirements.


The Company's revolving credit facility is a five-year credit agreement (the "Credit Agreement") with a syndicate of lenders that provides a $750In March 2020, the Company borrowed $100.0 million committed revolving credit facility. Commitments under the 2018 Credit Agreement may be increased toFacility and in April 2020, the Company borrowed an aggregate amount not to exceed $1.250 billion. The interest rate applicable toadditional $125.0 million. As of April 30, 2020, we have $525 million of remaining borrowing capacity under the 2018 Credit Agreement is generally eitherFacility. While the adjusted LIBOR plus an applicable margin (determined by referenceCompany believes that it has sufficient liquidity prior to taking this action to funds its operations and meet its obligations, the Company has further increased its cash position as a ratings based grid) or the alternate base rate. The singleprecautionary measure in order to preserve financial covenantflexibility in light of current uncertainty in the Credit Agreement, whichglobal markets resulting from the Company was in compliance with at September 30, 2017, requires that total debt not exceed 55% of total capitalization as of the last day of each fiscal quarter of the Company. Annual commitment fees to support availability under the credit facility are not material. The Credit Agreement expires in December 2020. 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. As of September 30, 2017 the credit facility had not been drawn against.COVID-19 pandemic.


◦In addition to our commercial paper program and existing revolving credit facility, we also have the ability to obtain additional financing through the issuance of long-term debt. Considering our current credit rating, historical earnings performance, and financial position, we believe that we would be able to obtain additional long-term debt financing on attractive terms.
 
Critical Accounting Estimates
 
 
A summary of our critical accounting estimates is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2016.2019. 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. Changes in the estimates and assumptions we use could have a material impact on our financial results. During the first ninethree months of 2017,2020, there were no material changes in our estimates and critical accounting policies.




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Forward-Looking Statements
 
 
Some of the information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Form 10-Q, contain “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. These include statements about our expectations regarding manufacturing efficiency,our financial results, condition and outlook, anticipated end markets, expected capital resources, expenses, employer contributions, liquidity, financial performance, pension funding, and from a multi-employer pension plan in which we participated, and results of operations and are based on our reasonable current expectations. In addition, all statements regarding restructuring plansthe anticipated effects of the COVID-19 pandemic and expected associated coststhe responses thereto, including the pandemic’s impact on general economic and benefits, expected futuremarket conditions, as well as on our business, customers, end markets, results of operations and financial performance, expected outcome of legal proceedings, or improvementcondition and anticipated actions to be taken by management to sustain the Company during the economic uncertainty caused by the pandemic and related governmental and business actions, as well as other statements that are not strictly historic in nature are forward looking. In addition, all statements regarding anticipated growth, changes in operating results, anticipated changes in tax rates, anticipated market conditions potential future acquisitions, enhancement of shareholder value,and economic conditions, adoption of updated accounting standards and any expected effects of such adoption, restructuring plans and expected associated costs and benefits, intent to repurchase shares of common stock, and changes in operating results, anticipated market conditions and productivity initiatives, including those regarding the adverse impact of the COVID-19 pandemic on the Company's end markets, are forward looking. Forward-looking statements may be identified by the use of words, such as “believe”, “expect”, “anticipate”, “intend”, “depend”, “should”, “plan”, “estimated”, “predict”, “could”, “may”, “subject to”, “continues”, “growing”, “prospective”, “forecast”, “projected”, “purport”, “might”, “if”, “contemplate”, “potential”, “pending,” “target”, “goals”, “scheduled”, “will likely be”, and similar words and phrases. Discussions of strategies, plans or intentions often contain forward-looking statements. Important factors, among others, that could cause our actual results and future actions to differ materially from those described in forward-looking statements include, but are not limited to:
 
The scope and duration of the novel coronavirus, or COVID-19, global pandemic and its impact on global economic systems, our employees, sites, operations, customers, and supply chain.
Changes in demand for our products, market conditions, product quality, or product availability adversely affecting sales levels.
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 initiatives and strategic sourcing plans,plans.
Impacts of trade tariffs, import quotas or other trade restrictions or measures taken by the U.S., U.K. and restructuring initiatives.
The expected benefits and the timing of other actions in connection with our Enterprise Resource Planning ("ERP") system.countries.
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, markets or geographic regions, as well as inflationary trends.
Regulatory issues, changes in tax laws including the TCJA, or changes in geographic profit mix affecting tax rates and availability of tax incentives.
A major disruption in one or more 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 which 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.pensions and other retirement benefits, as well as pension withdrawal liabilities.
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 as well as the acquisition related costs.
Ability to successfully execute, manage and integrate key acquisitions, mergers, and other transactions.
The ability to effectively implement ERPEnterprise Resource Planning systems without disrupting operational and financial processes.
Unanticipated difficulties integrating acquisitions as well as the realization of expected synergies and benefits anticipated when we first enter into a transaction.make an acquisition.
The ability of governmentsgovernment customers to meet their financial obligations.
Political unrest in foreign countries.
Natural disasters.The impact of Brexit and other world economic and political issues.
The impact of natural disasters or public health emergencies, such as the COVID-19 global pandemic, on our financial condition and results of operations.
Failure of information technology systems or security breaches resulting in unauthorized disclosure of confidential information.
Future revisions to or clarifications of the TCJA.
Future repurchases of common stock under our common stock repurchase program.
Changes in accounting principles, interpretations, or estimates.
The outcome of environmental, legal and tax contingencies or costs compared to amounts provided for such contingencies.contingencies, including contingencies or costs with respect to pension withdrawal liabilities.

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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.
Transitioning from LIBOR to a replacement alternative reference rate.
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, 2016.2019 and in the Company's Quarterly Reports on Form 10-Q.


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.



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ITEM 3Quantitative and Qualitative Disclosures About Market Risk
 
In the operation of its business, the Company has exposures to fluctuating foreign currency exchange rates, availability of purchased finished goods and raw materials, changes in material prices, foreign sourcing issues, and changes in interest rates. There have been no significant changes in our exposure to these market risks during the first ninethree months of 2017.2020. For a complete discussion of the Company’s exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk”, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019.


ITEM 4Controls and Procedures
 
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed under the Securities Exchange Act of 1934, as amended the (“Exchange(the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.
 
Our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this reportQuarterly Report on Form 10-Q. Based upon that evaluation, each of the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2017,March 31, 2020, the Company’s disclosure controls and procedures were effective at the reasonable assurance level.

There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


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PART IIOTHER INFORMATION
 
ITEM 1ARisk Factors


There have been no material changesFor a discussion of our potential risks and uncertainties, see the risk factor below and the information under the heading “Risk Factors” in the Company’s risk factors from those disclosed in theour Annual Report on Form 10-K for the year ended December 31, 2016.2019.

Our business and operations, and the operations of our suppliers, have been, and may in the future be adversely affected by epidemics or pandemics such as the COVID-19 pandemic outbreak. 

We may face risks related to health epidemics and pandemics or other outbreaks of communicable diseases. The global spread of COVID-19 has created significant volatility, uncertainty and economic disruption, including significant volatility in the capital markets. The extent to which the COVID-19 pandemic impacts our business, operations, financial results and the trading price of our common stock will depend on numerous evolving factors that we may not be able to accurately predict, including: the duration and scope of the pandemic; governmental and business actions that have been and continue to be taken in response to the pandemic (including mitigation efforts such as stay at home and other social distancing orders) and the impact of the pandemic on economic activity and actions taken in response (including stimulus efforts such as the Families First Coronavirus Act and the CARES Act).

A public health epidemic or pandemic, such as the COVID-19 pandemic, poses the risk that our employees, contractors, suppliers, customers and other business partners may be prevented from conducting business activities for an indefinite period of time, including due to shutdowns that may be requested or mandated by governmental authorities, or that such epidemic may otherwise interrupt or impair business activities. In the first quarter of 2020 and in April 2020, we have been subject to such shutdowns. We have adjusted standard operating procedures within our business operations to ensure continued worker, vendor and customer safety, are taking further actions to mitigate the impact of the pandemic on our business, and are continually monitoring evolving health guidelines, as well as market conditions, and responding to changes as appropriate; however, we cannot be certain that these efforts will prevent further disruption due to shutdowns or other pandemic mitigation efforts and could have a material adverse affect on our results of operations and liquidity.

We expect overall weaker global economic conditions as a result of efforts to contain the spread of COVID-19 and a resulting decline in demand across many of our end markets. We expect our results of operations will reflect lower sales volume, lower absorption of manufacturing costs and other cost increases to operate in the current environment. While we have placed additional monitoring controls over customer credit, weakening economic conditions may also result in deterioration in the collection of customer accounts receivable, as well as a reduction in sales. Further deterioration in economic and business conditions could also require us to recognize impairment losses that would adversely affect our results of operations. The ultimate extent, duration, and impact of the COVID-19 pandemic is uncertain and we cannot predict or quantify with any certainty the extent to which it will adversely affect our future financial condition, results of operations, cash flows or market price of our common stock.


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ITEM 2Unregistered Sales of Equity Securities and Use of Proceeds
 
Issuer Purchases of Equity Securities


On August 23, 2015, the Board of Directors authorized a common stock repurchase program in the amount of $250 million (the "August 2015 program") and as of December 31, 2016, we had $153.6 million of remaining share authorization under the repurchase program. In the first six months of 2017, the Company repurchased shares for an aggregate purchase price of $92.6 million, and the August 2015 program expires in October, 2017. On October 20, 2017, the Board of Directors approved a new stock repurchase program (the “October 2017 program”) that authorized the repurchase of up to $400 million of common stock and expires on October 20, 2020. AsIn the three months ended March 31, 2020, the Company repurchased shares for an aggregate purchase price of October 25, 2017, the entire $400 million remains authorized for repurchasesapproximately $41.3 million. Our remaining share repurchase authorization under the October 2017 program.program is $283.7 million. Subject to numerous factors, including market conditions and alternative uses of cash, we may conduct discretionary repurchases through open market or privately negotiated transactions, which may include repurchases under plans complying with Rules 10b5-1 and 10b-18 under the Securities Exchange Act of 1934, as amended.


The following table summarizes the Company's repurchase activity of common stock during the quarter ended March 31, 2020:


 
Total Number of Shares of Common Stock Purchased (a)

Average Price Paid per share of Common Stock
Approximate Value of Shares that May Yet Be Purchased Under
the Programs

Period(000’s)
Share
(in millions)
BALANCE AS OF DECEMBER 31, 2019



$325.0
January 2020—
$—
$325.0
February 2020107
$142.56
$309.7
March 2020214
$121.56
$283.7
TOTAL FOR THE QUARTER ENDED MARCH 31, 2020321
$128.56


(a) Purchased under our 2017 share repurchase program authorizing the repurchase of up to $400 million shares of common stock, which was publicly announced in October 2017.

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ITEM 6Exhibits


  Incorporated by Reference  
Exhibit
Number
Exhibit DescriptionFormFile No.Exhibit
Filing
Date
Filed/
Furnished
Herewith
4.1
Fourth Supplemental Indenture, dated as of August 3, 2017, between Hubbell Incorporated and The Bank of New York Mellon Trust Company, N.A. (formerly known as The Bank of New York Trust Company, N.A. (successor as trustee to JPMorgan Chase Bank, N.A. (formerly known as JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank, formerly known as Chemical Bank))), as trustee.

8-K
001-02958

4.2August 3, 2017 
31.1
Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    *
31.2
Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    *
32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    **
32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
    **
101.INSXBRL Instance Document    *
101.SCHXBRL Taxonomy Extension Schema Document    *
101.CALXBRL Taxonomy Extension Calculation Linkbase Document    *
101.DEFXBRL Taxonomy Extension Definition Linkbase Document    *
101.LABXBRL Taxonomy Extension Label Linkbase Document    *
101.PREXBRL Taxonomy Extension Presentation Linkbase Document    *
Incorporated by Reference
Exhibit
Number
Exhibit DescriptionFormFile No.Exhibit
Filing
Date
Filed/
Furnished
Herewith
31.1
Certification of Chief Executive Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*
31.2
Certification of Chief Financial Officer Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
*
32.1
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**
32.2
Certification of Chief Financial Officer Pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
**
101.INSInline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document
101.SCHInline XBRL Taxonomy Extension Schema Document*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document*
104The cover page of this Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (included within the Exhibit 101 attachments)*
*Filed herewith
**Furnished herewith


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Signatures
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date: October 25, 2017May 1, 2020
 
HUBBELL INCORPORATED   
    
By/s/ William R. SperryBy/s/ Joseph A. Capozzoli 
 William R. Sperry Joseph A. Capozzoli 
 SeniorExecutive Vice President, and Chief Financial Officer and Treasurer Vice President, Controller (Principal Accounting Officer) 


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