2020 Acquisitions

In the fourth quarter of 2020 we completed the following acquisitions:

The Company acquired all of the issued and outstanding shares of Armorcast Products Company, Inc. (“Armorcast”) for $136.8 million, net of cash acquired. Armorcast develops and manufactures polymer concrete and fiberglass products for the utility industry. Armorcast is reported in the Utility Solutions segment. We have recognized intangible assets of $53.8 million, primarily consisting of customer relationships and a tradename, and goodwill of $65.1 million as a result of this acquisition. The intangible assets will be amortized over a weighted average period of approximately 19 years.

The Company acquired all of the issued and outstanding shares of Beckwith Electric Co., Inc. (“Beckwith”) for $54.3 million, net of cash acquired. Beckwith is a manufacturer and installer of protection relay and distribution control units used in electronic power systems. Beckwith is reported in the Utility Solutions segment. We have recognized intangible assets of $33.2 million, primarily consisting of customer relationships, technology and a tradename, and goodwill of $12.5 million as a result of this acquisition. The intangible assets will be amortized over a weighted average period of approximately 15 years.

The Company acquired all of the issued and outstanding shares of AccelTex Solutions, LLC (“AccelTex”) for $45.1 million, net of cash acquired. AccelTex is a manufacturer of products and accessories for wireless networks. AccelTex is reported in the Electrical Solutions segment. We have recognized intangible assets of $19.4 million, primarily consisting of customer relationships and a tradename, and goodwill of $21.1 million as a result of this acquisition. The intangible assets will be amortized over a weighted average period of approximately 15 years.

In the fourth quarter of 2020 the Company also completed a $1.6 million asset acquisition, of which $0.2 million of the purchase price payment is deferred, and recognized $1.0 million of goodwill as a result.

These business acquisitions have been accounted for as business combinations and have resulted in the recognition of goodwill. The goodwill relates to a number of factors implied in the purchase price, including the future earnings and cash flow potential of the businesses as well as the complementary strategic fit and resulting synergies they bring to the Company’s existing operations.

With the exception of tradenames, we amortize intangible assets using 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. Tradenames are amortized on a straight-line basis.

All of the goodwill associated with the 2020 acquisitions is deductible for tax purposes, except the goodwill associated with the acquisition of Beckwith.

Preliminary Allocation of Consideration Transferred to Net Assets Acquired

The following table presents the preliminary determination of the fair value of identifiable assets acquired and liabilities assumed from the Company's 2020 acquisitions. The final determination of the fair value of certain assets and liabilities will be completed within the one year measurement period as required by the FASB ASC Topic 805, “Business Combinations.” As the Company finalizes the fair value of assets acquired and liabilities assumed, additional purchase price adjustments may be recorded during the measurement period. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations. The finalization of the purchase accounting assessment may result in a change in the valuation of assets acquired and liabilities assumed and may have a material impact on the Company's results of operations and financial position.

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed as of the respective date of acquisition for all transactions (in millions):



Tangible assets acquired	$	66.5
Intangible assets	106.4
Goodwill	99.7
Net deferred taxes	(8.6)
Other liabilities assumed	(26.4)
Total Estimate of Consideration Transferred, Net of Cash Acquired	$	237.6

The Consolidated Financial Statements include the results of operations of the acquired businesses from their respective dates of acquisition. Net sales and earnings related to these acquisitions for the year ended December 31, 2020 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.

Cash used for the acquisition of businesses, net of cash acquired as reported in the Consolidated Statement of Cash Flows for the year ended December 31, 2020 is $239.6 million and includes approximately $2.0 million of net working capital settlements relating to acquisitions completed in the previous year.

2019 Acquisitions

In the fourth quarter of 2019, the Company acquired 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”) for $38.4 million, net of cash acquired. Cantega is a provider of innovative asset protection solutions and services for electrical utilities that complements the Company's existing power systems business. Cantega is reported in the Utility Solutions segment. We have recognized intangible assets of $20.4 million, primarily consisting of customer relationships and technology, and goodwill of $16.9 million as a result of this acquisition. The intangible assets consists will be amortized over a weighted average period of approximately 12 years.

In the fourth quarter of 2019, the Company also acquired substantially all the assets of Connector Products, Incorporated (“CPI”) for $27.9 million. CPI is a manufacturer of electrical connectors and accessories for power utilities and mass transit systems. CPI is reported in the Electrical Solutions segment. We have recognized intangible assets of $12.8 million, primarily consisting of customer relationships and a tradename, and goodwill of $11.0 million as a result of this acquisition. The intangible assets will be amortized over a weighted average period of approximately 18 years.

In 2019 the Company also completed a $5.0 million asset acquisition, and recognized $4.7 million of goodwill as a result.

All of the goodwill associated with the 2019 acquisitions is deductible for tax purposes, except the goodwill associated with the acquisition of Cantega.

Allocation of Consideration Transferred to Net Assets Acquired

The following table presents the determination of the fair value of identifiable assets acquired and liabilities assumed from the Company's 2019 acquisitions. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations.

The following table summarizes the assets acquired and liabilities assumed as of the respective date of acquisition for all transactions (in millions):



Tangible assets acquired	$	17.9
Intangible assets	33.2
Goodwill	32.5
Net deferred taxes	(4.4)
Other liabilities assumed	(7.9)
Total Estimate of Consideration Transferred, Net of Cash Acquired	$	71.3

The Consolidated Financial Statements include the results of operations of the acquired businesses from their respective dates of acquisition. Net sales and earnings related to these acquisitions for the year ended December 31, 2019 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.

Cash used for the acquisition of businesses, net of cash acquired as reported in the Consolidated Statement of Cash Flows for the year ended December 31, 2019 is $70.8 million and includes approximately $1.5 million of deferred purchase price relating to an acquisition completed in a previous year.

2018 Acquisition

On February 2, 2018, the Company completed the acquisition of Aclara for approximately $1.1 billion. Aclara is a leading global provider of smart infrastructure solutions for electric, gas, and water utilities, with advanced metering solutions and grid monitoring sensor technology, as well as leading software enabled installation services. The acquisition was structured as a merger in which Aclara became a wholly owned indirect subsidiary of the Company. Aclara's businesses have been added to the Utility Solutions segment. The acquisition extends the Utility Solutions segment's capabilities into smart automation technologies, accelerates ongoing innovation efforts to address utility customer demand for data and integrated solutions, and expands the segment's reach to a broader set of utility customers.

The Company financed the acquisition and related transactions with net proceeds from borrowings under an unsecured term loan facility in an aggregate principal amount of $500 million, the issuance of 3.50% Senior Notes due 2028 in an aggregate principal amount of $450 million and commercial paper borrowings.

Allocation of Consideration Transferred to Net Assets Acquired

The following table presents the determination of the fair value of identifiable assets acquired and liabilities assumed from the Company's acquisition of Aclara. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations.

The following are the assets acquired and the liabilities assumed by the Company in the Aclara acquisition, reconciled to the acquisition consideration (in millions):



Accounts receivable	$	118.1
Inventories	73.5
Other current assets	8.5
Property, plant and equipment	30.9
Intangible assets	434.0
Accounts payable	(51.8)
Other accrued liabilities	(93.3)
Deferred tax liabilities, net	(42.1)
Other non-current liabilities	(67.7)
Noncontrolling interest	(2.5)
Goodwill	708.7
Total Estimate of Consideration Transferred, Net of Cash Acquired	$	1,116.3

Cash used for the acquisition of businesses, net of cash acquired as reported in the Consolidated Statement of Cash Flows for the twelve months ended December 31, 2018 is $1,118.0 million and includes approximately $1.7 million of deferred purchase price and net working capital settlements relating to acquisitions completed in previous years.

In connection with the Aclara transaction, the Company recorded goodwill of $708.7 million, which is attributable primarily to expected synergies, expanded market opportunities, and other expected benefits that the Company believes will result from combining its operations with the operations of Aclara. For tax purposes, $159.9 million of the Aclara historical goodwill is deductible. The incremental goodwill created as a result of the acquisition is not deductible for tax purposes. Goodwill has been allocated to the Utility Solutions segment.

The purchase price allocation to identifiable intangible assets acquired is as follows (in millions, except useful life amounts):


	Estimated Fair Value		Weighted Average Estimated Useful Life
Patents, tradenames and trademarks	$	55.0	20.0
Customer relationships	194.0		18.0
Developed technology	185.0		13.0
Total	$	434.0

Customer relationships and developed technology intangible assets acquired are amortized using 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 asset's useful life.

For the year ended December 31, 2018, the Company recorded transaction costs of $12.8 million relating to the acquisition of Aclara. These costs were recorded in the respective financial statement line items as follows (in millions):


	Twelve Months Ended December 31,
	2018
Selling & administrative expense	$	9.5
Interest expense	3.3
Total Aclara Transaction Costs	$	12.8

Supplemental Pro-Forma Data

Aclara’s results of operations have been included in the Company's financial statements for the period subsequent to the completion of the acquisition on February 2, 2018. Aclara contributed sales of approximately $611.1 million and operating income of approximately $29.6 million, before any transaction costs described below, for the period from the completion of the acquisition through December 31, 2018.

The following unaudited supplemental pro-forma information presents consolidated results as if the acquisition had been completed on January 1, 2017. The unaudited supplemental pro-forma financial information does not reflect the actual performance of Aclara in the periods presented and does not reflect the potential realization of cost savings relating to the integration of the two companies. Further, the pro-forma data should not be considered indicative of the results that would have occurred if the acquisition and related financing had been consummated on January 1, 2017, nor are they indicative of future results. Per share amounts in 2018 reflect the reduction in the U.S. federal corporate income tax rate from 35% to 21%:


(in millions, except per share amounts)	Twelve Months Ended December 31,
		2018
Net sales		$	4,531.2
Net income attributable to Hubbell		$	376.4
Earnings Per Share:
Basic		$	6.86
Diluted		$	6.83

Dispositions

In August 2019, the Company completed the sale of Haefely Test, AG (“Haefely”) for $38.1 million. Haefely designs and manufactures high voltage test equipment and is based in Basel, Switzerland. The Haefely business was previously included within the Electrical Solutions segment. Upon disposition, the Haefely business had tangible assets of $32.3 million (primarily composed of cash, accounts receivable, inventories, and property, plant and equipment), goodwill of $3.1 million, total liabilities of $12.2 million (primarily composed of accounts payable, accrued expenses, and cash received in advance from customers) and a $7.7 million balance of cumulative currency translation adjustments recognized within Accumulated other comprehensive income. As a result of the sale of Haefely, we recognized a pre-tax gain of $21.7 million that is included in Total other expense in the Consolidated Statement of Income.