Company Quick10K Filing
Hubbell
Price137.88 EPS7
Shares55 P/E19
MCap7,542 P/FCF20
Net Debt1,414 EBIT479
TEV8,956 TEV/EBIT19
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-07-31
10-Q 2020-03-31 Filed 2020-05-01
10-K 2019-12-31 Filed 2020-02-14
10-Q 2019-09-30 Filed 2019-10-30
10-Q 2019-06-30 Filed 2019-07-31
10-Q 2019-03-31 Filed 2019-05-01
10-K 2018-12-31 Filed 2019-02-15
10-Q 2018-09-30 Filed 2018-10-24
10-Q 2018-06-30 Filed 2018-07-25
10-Q 2018-03-31 Filed 2018-04-25
10-K 2017-12-31 Filed 2018-02-15
10-Q 2017-09-30 Filed 2017-10-25
10-Q 2017-06-30 Filed 2017-07-26
10-Q 2017-03-31 Filed 2017-04-26
10-K 2016-12-31 Filed 2017-02-16
10-Q 2016-09-30 Filed 2016-10-26
10-Q 2016-06-30 Filed 2016-07-27
10-Q 2016-03-31 Filed 2016-04-27
10-K 2015-12-31 Filed 2016-02-18
10-Q 2015-09-30 Filed 2015-10-23
10-Q 2015-06-30 Filed 2015-07-24
10-Q 2015-03-31 Filed 2015-04-24
10-K 2014-12-31 Filed 2015-02-19
10-Q 2014-09-30 Filed 2014-10-24
10-Q 2014-06-30 Filed 2014-07-22
10-Q 2014-03-31 Filed 2014-04-22
10-K 2013-12-31 Filed 2014-02-18
10-Q 2013-09-30 Filed 2013-10-18
10-Q 2013-06-30 Filed 2013-07-19
10-Q 2013-03-31 Filed 2013-04-19
10-K 2012-12-31 Filed 2013-02-13
10-Q 2012-09-30 Filed 2012-10-19
10-Q 2012-06-30 Filed 2012-07-20
10-Q 2012-03-31 Filed 2012-04-20
10-K 2011-12-31 Filed 2012-02-15
10-Q 2011-09-30 Filed 2011-10-21
10-Q 2011-06-30 Filed 2011-07-22
10-Q 2011-03-31 Filed 2011-04-22
10-K 2010-12-31 Filed 2011-02-16
10-Q 2010-09-30 Filed 2010-10-22
10-Q 2010-06-30 Filed 2010-07-23
10-Q 2010-03-31 Filed 2010-04-23
10-K 2009-12-31 Filed 2010-02-19
8-K 2020-07-30 Earnings, Exhibits
8-K 2020-05-05
8-K 2020-04-30
8-K 2020-04-15
8-K 2020-04-09
8-K 2020-03-12
8-K 2020-02-04
8-K 2019-10-29
8-K 2019-07-30
8-K 2019-06-05
8-K 2019-05-07
8-K 2019-04-30
8-K 2019-03-11
8-K 2019-02-05
8-K 2018-12-10
8-K 2018-10-23
8-K 2018-07-24
8-K 2018-05-01
8-K 2018-04-24
8-K 2018-04-12
8-K 2018-02-02
8-K 2018-01-31
8-K 2018-01-31
8-K 2018-01-31
8-K 2018-01-30
8-K 2018-01-10

HUBB 10Q Quarterly Report

Part I Financial Information
Item 1Financial Statements
Note 1 Basis of Presentation
Note 2 Revenue
Note 3 Segment Information
Note 4 Inventories, Net
Note 5 Goodwill and Other Intangible Assets, Net
Note 6 Other Accrued Liabilities
Note 7 Other Non - Current Liabilities
Note 8 Total Equity
Note 9 Accumulated Other Comprehensive Loss
Note 10 Earnings per Share
Note 11 Pension and Other Benefits
Note 12 Guarantees
Note 13 Fair Value Measurement
Note 14 Commitments and Contingencies
Note 15 Restructuring Costs and Other
Note 16 Long - Term Debt and Financing Arrangements
Note 17 Stock - Based Compensation
Item 2Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3Quantitative and Qualitative Disclosures About Market Risk
Item 4Controls and Procedures
Part II Other Information
Item 1Arisk Factors
Item 2Unregistered Sales of Equity Securities and Use of Proceeds
Item 6Exhibits
EX-31.1 hubb-20200630xex311.htm
EX-31.2 hubb-20200630xex312.htm
EX-32.1 hubb-20200630xex321.htm
EX-32.2 hubb-20200630xex322.htm

Hubbell Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
1.31.00.80.50.30.02012201420172020
Rev, G Profit, Net Income
1.00.60.1-0.3-0.8-1.22012201420172020
Ops, Inv, Fin

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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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

hubb-20200630_g1.jpg  
HUBBELL INCORPORATED
(Exact name of registrant as specified in its charter)
 
Connecticut06-0397030
(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 mark
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.
YesNo
whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
YesNo
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 filer
Accelerated filer 
Non-accelerated filer 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).
YesNo
 The number of shares outstanding of Hubbell common stock as of July 29, 2020 was 54,228,170.
HUBBELL INCORPORATED-Form 10-Q    1

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Index
Table of contents
 
 
 
 
 
 
   
 

HUBBELL INCORPORATED-Form 10-Q    2

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PART I
FINANCIAL INFORMATION

ITEM 1Financial Statements

Condensed Consolidated Statements of Income (unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
(in millions, except per share amounts)2020201920202019
Net sales$949.2  $1,196.4  $2,039.5  $2,283.7  
Cost of goods sold668.7  839.0  1,445.5  1,619.0  
Gross profit280.5  357.4  594.0  664.7  
Selling & administrative expenses149.0  190.5  343.7  376.9  
Operating income131.5  166.9  250.3  287.8  
Interest expense, net(15.7) (17.2) (30.8) (34.7) 
Multi-employer pension charge (Note 14)  (22.9)   (22.9) 
Other expense, net(2.8) (3.2) (6.6) (8.6) 
Total other expense(18.5) (43.3) (37.4) (66.2) 
Income before income taxes113.0  123.6  212.9  221.6  
Provision for income taxes23.9  25.7  48.1  49.9  
Net income89.1  97.9  164.8  171.7  
Less: Net income attributable to noncontrolling interest0.9  1.9  1.6  3.4  
Net income attributable to Hubbell Incorporated$88.2  $96.0  $163.2  $168.3  
Earnings per share  
Basic
$1.62  $1.76  $3.00  $3.08  
Diluted
$1.62  $1.75  $2.99  $3.07  
Cash dividends per common share$0.91  $0.84  $1.82  $1.68  
See notes to unaudited Condensed Consolidated Financial Statements.
HUBBELL INCORPORATED-Form 10-Q    3

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Condensed Consolidated Statements of Comprehensive Income (unaudited)
 
 Three Months Ended June 30,
(in millions)20202019
Net income$89.1  $97.9  
Other comprehensive (loss) income:  
Foreign currency translation adjustments1.8  (3.8) 
Defined benefit pension and post-retirement plans, net of taxes of $(0.5) and $(0.6)
1.8  1.9  
Available-for-sale investments, net of taxes of $(0.1) and $(0.1)
0.5  0.3  
Unrealized gain (loss) on cash flow hedges, net of taxes of $0.3 and $0.3
(0.7) (0.7) 
Other comprehensive (loss) income3.4  (2.3) 
Total comprehensive income92.5  95.6  
Less: Comprehensive income attributable to noncontrolling interest0.9  1.9  
Comprehensive income attributable to Hubbell Incorporated$91.6  $93.7  
See notes to unaudited Condensed Consolidated Financial Statements.



Six Months Ended June 30,
(in millions)20202019
Net income$164.8  $171.7  
Other comprehensive (loss) income:
Foreign currency translation adjustments(23.8) 3.3  
Defined benefit pension and post-retirement plans, net of taxes of $(1.1) and $(1.1)
3.5  3.4  
Available-for-sale investments, net of taxes of $(0.1) and $(0.2)
0.4  0.6  
Unrealized gain (loss) on cash flow hedges, net of taxes of $(0.3) and $0.5
0.9  (1.3) 
Other comprehensive (loss) income(19.0) 6.0  
Total comprehensive income145.8  177.7  
Less: Comprehensive income attributable to noncontrolling interest1.6  3.4  
Comprehensive income attributable to Hubbell Incorporated$144.2  $174.3  
See notes to unaudited Condensed Consolidated Financial Statements.
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Condensed Consolidated Balance Sheets (unaudited)
 
(in millions)
June 30, 2020December 31, 2019
ASSETS  
Current Assets  
Cash and cash equivalents
$485.0  $182.0  
Short-term investments
9.9  14.2  
Account receivable (net of allowances of $14.9 and $7.7)
644.1  683.0  
Inventories, net
604.2  633.0  
   Other current assets50.4  62.0  
Total Current Assets
1,793.6  1,574.2  
Property, Plant, and Equipment, net489.1  505.2  
Other Assets  
Investments
54.3  55.7  
Goodwill
1,808.7  1,811.8  
Other intangible assets, net
740.7  781.5  
Other long-term assets
172.3  174.6  
TOTAL ASSETS$5,058.7  $4,903.0  
LIABILITIES AND EQUITY  
Current Liabilities  
Short-term debt and current portion of long-term debt
$145.2  $65.4  
Accounts payable
354.4  347.7  
Accrued salaries, wages and employee benefits
66.6  101.5  
Accrued insurance
76.9  68.1  
Other accrued liabilities
237.6  262.2  
Total Current Liabilities
880.7  844.9  
Long-Term Debt1,610.4  1,506.0  
Other Non-Current Liabilities594.1  591.6  
TOTAL LIABILITIES3,085.2  2,942.5  
Hubbell Incorporated Shareholders’ Equity1,959.9  1,947.1  
Noncontrolling interest13.6  13.4  
Total Equity1,973.5  1,960.5  
TOTAL LIABILITIES AND EQUITY$5,058.7  $4,903.0  
See notes to unaudited Condensed Consolidated Financial Statements.
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Condensed Consolidated Statements of Cash Flows (unaudited)
 Six Months Ended June 30,
(in millions)20202019
Cash Flows from Operating Activities  
Net income$164.8  $171.7  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
77.6  73.7  
Deferred income taxes
(0.5) (4.4) 
Stock-based compensation
15.9  8.3  
    Provision for bad debt expense6.8  (0.3) 
Multi-employer pension charge
  22.9  
Changes in assets and liabilities, excluding effects of acquisitions: 
Decrease (increase) in accounts receivable, net
25.0  (59.0) 
Decrease (increase) in inventories, net
24.5  (10.1) 
Increase in accounts payable
13.1  39.0  
Decrease in current liabilities
(45.7) (36.1) 
Changes in other assets and liabilities, net
17.8  5.9  
Contribution to qualified defined benefit pension plans(1.4) (0.2) 
Other, net5.8  (1.8) 
Net cash provided by operating activities303.7  209.6  
Cash Flows from Investing Activities  
Capital expenditures(35.0) (47.7) 
Acquisition of businesses, net of cash acquired(2.0)   
Purchases of available-for-sale investments(4.7) (4.5) 
Proceeds from available-for-sale investments11.1  7.1  
Other, net3.7  3.6  
Net cash used in investing activities(26.9) (41.5) 
Cash Flows from Financing Activities 
Long-term debt borrowings225.0    
Long-term debt repayments(115.6) (12.5) 
Short-term debt borrowings (repayments), net73.5  (5.0) 
Payment of dividends to shareholders(98.9) (91.5) 
Payment of dividends to noncontrolling interest(1.6) (2.6) 
Repurchase of common stock(41.3) (30.0) 
Other, net(6.5) (6.6) 
Net cash (used) provided by financing activities34.6  (148.2) 
Effect of exchange rate changes on cash and cash equivalents(8.4) 1.0  
Increase in cash and cash equivalents303.0  20.9  
Cash and cash equivalents
Beginning of period182.0  189.0  
End of period$485.0  $209.9  
See notes to unaudited 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 Statements of Hubbell Incorporated (“Hubbell”, the “Company”, “registrant”, “we”, “our” or “us”, which references 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 United States of America (“U.S.”) GAAP for audited 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 six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 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, 2019 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by 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, 2019.

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) and began to affect the Company’s business and operations late in the first quarter of 2020 and became more pronounced during the second quarter of 2020. The pandemic continues to significantly impact global economic conditions and in the U.S. as federal, state, local, and foreign governments react 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 will continue to affect 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 June 2016, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update (ASU 2016-13), "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" (ASC 326 or "CECL"), which amends the impairment 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 financial instruments, including trade receivables. This may result in the earlier 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 taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued. 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. The Company is currently assessing the impact of adopting this standard on its financial statements and the timing of adoption.
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In March 2020, FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting", which provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments are effective for all entities beginning on March 12, 2020 through December 31, 2022. The Company may elect to apply the amendments prospectively through December 31, 2022. The Company has not adopted this ASU as of June 30, 2020. The Company is currently assessing the impact of adopting this standard on its financial statements and the timing of adoption.


NOTE 2 Revenue
 
The Company recognizes revenue when performance obligations identified under the terms of contracts with its customers are satisfied, which generally occurs, for products, upon the transfer of control 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 Utility Solutions segment recognized upon delivery of the product at the destination. Revenue from service contracts and post-shipment performance obligations are approximately three percent of total annual consolidated net revenue and those 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 shipping and handling costs within revenue. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as fulfillment costs and are 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 Utility Solutions segment, certain businesses offer annual maintenance service contracts that require payment at the beginning of the contract period. These payments are treated as a contract liability and are classified in Other accrued liabilities in the Condensed Consolidated Balance Sheets. Once control transfers to the 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 presents disaggregated revenue by business group:
Three Months Ended June 30,Six Months Ended June 30,
in millions2020201920202019
Net sales
   Commercial and Industrial$167.7  $234.3  $380.7  $455.6  
   Construction and Energy159.7  207.3  351.1  395.6  
   Lighting179.7  246.6  381.4  467.2  
Total Electrical$507.1  $688.2  $1,113.2  $1,318.4  
   Power Systems312.9  334.1  639.2  626.1  
   Aclara129.2  174.1  287.1  339.2  
Total Utility Solutions$442.1  $508.2  $926.3  $965.3  
TOTAL$949.2  $1,196.4  $2,039.5  $2,283.7  

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The following table presents disaggregated revenue by geographic location (on a geographic basis, the Company defines "international" as operations based outside of the United States and its possessions):
Three Months Ended June 30,Six Months Ended June 30,
in millions2020201920202019
Net sales
   United States$461.9  $620.4  $1,011.6  $1,186.1  
   International45.2  67.8  101.6  132.3  
Total Electrical$507.1  $688.2  $1,113.2  $1,318.4  
   United States418.8  477.8  874.3  909.0  
   International23.3  30.4  52.0  56.3  
Total Utility Solutions$442.1  $508.2  $926.3  $965.3  
TOTAL$949.2  $1,196.4  $2,039.5  $2,283.7  

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 Balance Sheets.

Contract liabilities were $36.8 million as of June 30, 2020 compared to $31.0 million as of December 31, 2019. The $5.8 million increase in our contract liabilities balance was primarily due to a $16.3 million net increase in current year deferrals primarily due to timing of advance payments on certain orders, partially offset by the recognition of $10.5 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 and six months ended June 30, 2020.

Unsatisfied Performance Obligations

As of June 30, 2020, the Company had approximately $300 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 Utility Solutions segment to deliver and install meters, metering communications and grid monitoring sensor technology. The Company expects that a majority of the unsatisfied performance obligations will be completed and recognized over the next three years.


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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 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 comprises businesses that sell stock and custom products including standard and special application wiring device products, rough-in electrical products, connector and grounding products, lighting fixtures and controls, components and assemblies for the natural gas distribution market and 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 systems used in the non-residential and industrial markets. Many of these products are designed such that they 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 three business groups, which have been aggregated as they have similar economic characteristics, customers and distribution channels, among other factors.

The Utility Solutions segment consists of businesses that design and manufacture various distribution, transmission, substation and telecommunications products primarily used by the electric, 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 electric, 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 utilities, telecommunication 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
 202020192020201920202019
Three Months Ended June 30,      
Electrical$507.1  $688.2  $57.1  $88.0  11.3 %12.8 %
Utility Solutions442.1  508.2  74.4  78.9  16.8 %15.5 %
TOTAL$949.2  $1,196.4  $131.5  $166.9  13.9 %14.0 %
Six Months Ended June 30,
Electrical$1,113.2  $1,318.4  $115.1  $156.6  10.3 %11.9 %
Utility Solutions926.3  965.3  135.2  131.2  14.6 %13.6 %
TOTAL$2,039.5  $2,283.7  $250.3  $287.8  12.3 %12.6 %
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NOTE 4 Inventories, net
 
Inventories, net consists of the following (in millions):
 June 30, 2020December 31, 2019
Raw material$233.4  $217.4  
Work-in-process115.3  101.8  
Finished goods345.5  403.6  
Subtotal694.2  722.8  
Excess of FIFO over LIFO cost basis(90.0) (89.8) 
TOTAL$604.2  $633.0  
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NOTE 5 Goodwill and Other Intangible Assets, net

Changes in the carrying values of goodwill for the six months ended June 30, 2020, were as follows (in millions):
 Segment 
 ElectricalUtility SolutionsTotal
BALANCE DECEMBER 31, 2019$727.7  $1,084.1  $1,811.8  
Prior year acquisitions0.3  3.4  3.7  
Foreign currency translation (3.0) (3.8) (6.8) 
BALANCE JUNE 30, 2020$725.0  $1,083.7  $1,808.7  
During the six months ended June 30, 2020, we recognized a net increase to the consideration paid primarily related to our acquisition of all of the issued and outstanding shares of Cantega Technologies Inc., including its wholly owned subsidiary Greenjacket Inc., and all of the issued and outstanding shares of Reliaguard Inc. (collectively "Cantega") as a result of the customary net working capital provisions in the acquisition agreement. The increase in net consideration paid of $2.0 million resulted in a corresponding increase to goodwill. The goodwill is not deductible for tax purposes.

The Company performs its goodwill impairment testing as of April 1st of each year, unless circumstances dictate the need for more frequent assessments. For the 2020 test, the Company applied the "Step-zero" test to three of its six reporting units with goodwill, which allows the Company to first assess qualitative factors to determine whether it is more likely than not that a reporting unit's fair value is greater than its carrying amount. Based on the qualitative assessment, the Company concluded that it was more likely than not that the fair value of these reporting units substantially exceeded their carrying values and therefore, further quantitative analysis was not required. For the other three reporting units, the Company has elected to utilize the quantitative goodwill impairment testing process as permitted in the accounting guidance, by comparing the fair value of the Company's reporting units to their carrying values. If the fair value of the reporting unit exceeds its carrying value, no impairment exists.

Goodwill impairment testing requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units and determining the fair value of each reporting unit. Significant judgment is required to estimate the fair value of reporting units including estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions, such as the potential continuing effects of the COVID-19 pandemic. The Company uses internal discounted cash flow estimates to determine fair value. These cash flow estimates are derived from historical experience, third party end market data, and future long-term business plans that include assumptions about future sales growth, gross margin, operating margin, and terminal growth rate and the application of discount rates determined by management to be appropriate. Significant changes in these estimates and assumptions could affect the determination of fair value and/or goodwill impairment for each reporting unit. The Company believes that its estimated aggregate fair value of its reporting units is reasonable when compared to the Company's market capitalization on the valuation date.

As of April 1, 2020, the impairment testing resulted in implied fair values for each reporting unit that exceeded the reporting unit's carrying value, including goodwill. The Company did not have any reporting units at risk of failing the quantitative impairment test as the excess of the implied fair value significantly exceeded the carrying value of the reporting units. Additionally, the Company did not have any reporting units with zero or negative carrying amounts.

The Company performs its impairment assessment of indefinite-lived intangible assets as of April 1st of each year, unless circumstances dictate the need for more frequent assessments. For the 2020 test, the Company has elected to utilize the quantitative impairment testing process as permitted in the accounting guidance, by comparing the fair value of the indefinite-lived intangible assets to their carrying values. If the fair value of the indefinite-lived intangible assets exceeds its carrying value, no impairment exists. The fair value was determined utilizing an income approach (relief from royalty method). Significant judgment is required to estimate the fair value of the indefinite-lived intangible assets including assumptions for future revenues, discount rates, royalty rates, and other assumptions, including assumptions about secular economic and market conditions, such as the potential continuing effects of the COVID-19 pandemic. Significant changes in these estimates and assumptions could affect the determination of fair value and/or impairment for each indefinite-lived intangible asset. As of April 1, 2020, the impairment testing resulted in fair values for each indefinite-lived intangible asset that exceeded the carrying value. The Company did not have any indefinite-lived intangible assets at risk of failing the quantitative impairment test as the excess of the fair value significantly exceeded the carrying value of the assets.
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The carrying value of other intangible assets included in Intangible assets, net in the Condensed Consolidated Balance Sheets is as follows (in millions):
 June 30, 2020December 31, 2019
 Gross AmountAccumulated
Amortization
Gross AmountAccumulated
Amortization
Definite-lived:    
Patents, tradenames and trademarks$201.1  $(68.8) $202.7  $(65.0) 
Customer relationships, developed technology and other858.1  (302.7) 861.0  (270.8) 
Total$1,059.2  $(371.5) $1,063.7  $(335.8) 
Indefinite-lived:  
Tradenames and other53.0  —  53.6  —  
TOTAL$1,112.2  $(371.5) $1,117.3  $(335.8) 
 
Amortization expense associated with definite-lived intangible assets was $18.6 million and $18.1 million during the three months ended June 30, 2020 and 2019, respectively, and $37.7 million and $36.3 million during the six months ended June 30, 2020 and 2019, respectively. Future amortization expense associated with these intangible assets is estimated to be $36.2 million for the remainder of 2020, $72.1 million in 2021, $67.0 million in 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 consists of the following (in millions):
 June 30, 2020December 31, 2019
Customer program incentives$30.1  $49.0  
Accrued income taxes12.7  6.0  
Contract liabilities - deferred revenue36.8  31.0  
Customer refund liability 18.7  19.0  
Accrued warranties