ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
OHIO
|
|
34-0451060
|
(State or other jurisdiction of
incorporation or organization)
|
|
(IRS Employer
Identification No.)
|
|
|
|
6035 Parkland Blvd., Cleveland, Ohio
|
|
44124-4141
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
|
ý
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|||
Non-accelerated filer
|
|
¨
|
|
Smaller reporting company
|
|
¨
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
¨
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net sales
|
$
|
3,479,294
|
|
|
$
|
3,364,651
|
|
Cost of sales
|
2,594,823
|
|
|
2,523,294
|
|
||
Selling, general and administrative expenses
|
394,322
|
|
|
396,984
|
|
||
Interest expense
|
44,339
|
|
|
53,555
|
|
||
Other (income) expense, net
|
(13,913
|
)
|
|
16,516
|
|
||
Income before income taxes
|
459,723
|
|
|
374,302
|
|
||
Income taxes
|
83,824
|
|
|
88,767
|
|
||
Net income
|
375,899
|
|
|
285,535
|
|
||
Less: Noncontrolling interest in subsidiaries' earnings
|
188
|
|
|
138
|
|
||
Net income attributable to common shareholders
|
$
|
375,711
|
|
|
$
|
285,397
|
|
|
|
|
|
||||
Earnings per share attributable to common shareholders:
|
|
|
|
||||
Basic
|
$
|
2.84
|
|
|
$
|
2.14
|
|
Diluted
|
$
|
2.79
|
|
|
$
|
2.10
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
375,899
|
|
|
$
|
285,535
|
|
Less: Noncontrolling interests in subsidiaries' earnings
|
188
|
|
|
138
|
|
||
Net income attributable to common shareholders
|
375,711
|
|
|
285,397
|
|
||
|
|
|
|
||||
Other comprehensive income (loss), net of tax
|
|
|
|
||||
Foreign currency translation adjustment and other
|
(35,125
|
)
|
|
72,879
|
|
||
Retirement benefits plan activity
|
23,873
|
|
|
26,735
|
|
||
Other comprehensive income (loss)
|
(11,252
|
)
|
|
99,614
|
|
||
Less: Other comprehensive (loss) for noncontrolling interests
|
(89
|
)
|
|
(87
|
)
|
||
Other comprehensive income (loss) attributable to common shareholders
|
(11,163
|
)
|
|
99,701
|
|
||
Total comprehensive income attributable to common shareholders
|
$
|
364,548
|
|
|
$
|
385,098
|
|
|
|
|
|
||||
|
September 30,
2018 |
|
June 30,
2018 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
952,122
|
|
|
$
|
822,137
|
|
Marketable securities and other investments
|
40,787
|
|
|
32,995
|
|
||
Trade accounts receivable, net
|
2,065,158
|
|
|
2,145,517
|
|
||
Non-trade and notes receivable
|
312,162
|
|
|
328,399
|
|
||
Inventories
|
1,762,640
|
|
|
1,621,304
|
|
||
Prepaid expenses and other
|
165,213
|
|
|
134,886
|
|
||
Total current assets
|
5,298,082
|
|
|
5,085,238
|
|
||
Plant and equipment
|
5,207,867
|
|
|
5,215,253
|
|
||
Less: Accumulated depreciation
|
3,379,833
|
|
|
3,359,016
|
|
||
Plant and equipment, net
|
1,828,034
|
|
|
1,856,237
|
|
||
Deferred income taxes
|
99,886
|
|
|
57,623
|
|
||
Investments and other assets
|
757,795
|
|
|
801,049
|
|
||
Intangible assets, net
|
1,956,101
|
|
|
2,015,520
|
|
||
Goodwill
|
5,485,144
|
|
|
5,504,420
|
|
||
Total assets
|
$
|
15,425,042
|
|
|
$
|
15,320,087
|
|
LIABILITIES
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Notes payable and long-term debt payable within one year
|
$
|
796,861
|
|
|
$
|
638,466
|
|
Accounts payable, trade
|
1,404,716
|
|
|
1,430,306
|
|
||
Accrued payrolls and other compensation
|
318,730
|
|
|
427,500
|
|
||
Accrued domestic and foreign taxes
|
238,423
|
|
|
198,878
|
|
||
Other accrued liabilities
|
549,791
|
|
|
502,333
|
|
||
Total current liabilities
|
3,308,521
|
|
|
3,197,483
|
|
||
Long-term debt
|
4,313,221
|
|
|
4,318,559
|
|
||
Pensions and other postretirement benefits
|
958,937
|
|
|
1,177,605
|
|
||
Deferred income taxes
|
265,418
|
|
|
234,858
|
|
||
Other liabilities
|
471,839
|
|
|
526,089
|
|
||
Total liabilities
|
9,317,936
|
|
|
9,454,594
|
|
||
EQUITY
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Serial preferred stock, $.50 par value; authorized 3,000,000 shares; none issued
|
—
|
|
|
—
|
|
||
Common stock, $.50 par value; authorized 600,000,000 shares; issued 181,046,128 shares at September 30 and June 30
|
90,523
|
|
|
90,523
|
|
||
Additional capital
|
503,052
|
|
|
496,592
|
|
||
Retained earnings
|
11,902,300
|
|
|
11,625,975
|
|
||
Accumulated other comprehensive (loss)
|
(1,775,983
|
)
|
|
(1,763,086
|
)
|
||
Treasury shares, at cost; 48,697,274 shares at September 30 and 48,632,105 shares at June 30
|
(4,618,512
|
)
|
|
(4,590,138
|
)
|
||
Total shareholders’ equity
|
6,101,380
|
|
|
5,859,866
|
|
||
Noncontrolling interests
|
5,726
|
|
|
5,627
|
|
||
Total equity
|
6,107,106
|
|
|
5,865,493
|
|
||
Total liabilities and equity
|
$
|
15,425,042
|
|
|
$
|
15,320,087
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
375,899
|
|
|
$
|
285,535
|
|
Adjustments to reconcile net income to net cash provided by operations:
|
|
|
|
||||
Depreciation
|
57,793
|
|
|
59,960
|
|
||
Amortization
|
54,698
|
|
|
56,147
|
|
||
Share incentive plan compensation
|
42,941
|
|
|
43,211
|
|
||
Deferred income tax expense
|
31,765
|
|
|
10,223
|
|
||
Foreign currency transaction loss
|
3,528
|
|
|
3,591
|
|
||
(Gain) on sale of plant and equipment
|
(3,826
|
)
|
|
(256
|
)
|
||
Loss on sale of businesses
|
3,029
|
|
|
—
|
|
||
(Gain) on marketable securities
|
(3,204
|
)
|
|
—
|
|
||
(Gain) loss on investments
|
(2,536
|
)
|
|
13,777
|
|
||
Changes in assets and liabilities, net of effect of acquisitions:
|
|
|
|
||||
Accounts receivable, net
|
78,369
|
|
|
23,432
|
|
||
Inventories
|
(124,995
|
)
|
|
(142,743
|
)
|
||
Prepaid expenses
|
(16,801
|
)
|
|
(13,053
|
)
|
||
Other assets
|
(19,144
|
)
|
|
(29,487
|
)
|
||
Accounts payable, trade
|
(24,347
|
)
|
|
(9,750
|
)
|
||
Accrued payrolls and other compensation
|
(106,992
|
)
|
|
(109,521
|
)
|
||
Accrued domestic and foreign taxes
|
40,670
|
|
|
17,253
|
|
||
Other accrued liabilities
|
18,974
|
|
|
11,164
|
|
||
Pensions and other postretirement benefits
|
(187,663
|
)
|
|
18,804
|
|
||
Other liabilities
|
(58,770
|
)
|
|
(287
|
)
|
||
Net cash provided by operating activities
|
159,388
|
|
|
238,000
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Acquisitions (net of cash acquired of $690 in 2018)
|
(2,042
|
)
|
|
—
|
|
||
Capital expenditures
|
(42,106
|
)
|
|
(79,336
|
)
|
||
Proceeds from sale of plant and equipment
|
10,969
|
|
|
12,448
|
|
||
Proceeds from sale of businesses
|
4,515
|
|
|
—
|
|
||
Purchases of marketable securities and other investments
|
(2,844
|
)
|
|
(70,253
|
)
|
||
Maturities of marketable securities and other investments
|
14,127
|
|
|
12,499
|
|
||
Other
|
2,318
|
|
|
7,329
|
|
||
Net cash (used in) investing activities
|
(15,063
|
)
|
|
(117,313
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from exercise of stock options
|
496
|
|
|
1,795
|
|
||
Payments for common shares
|
(65,351
|
)
|
|
(78,710
|
)
|
||
Proceeds from notes payable, net
|
258,540
|
|
|
35,200
|
|
||
Proceeds from long-term borrowings
|
44
|
|
|
928
|
|
||
Payments for long-term borrowings
|
(100,107
|
)
|
|
(6,522
|
)
|
||
Dividends
|
(100,869
|
)
|
|
(88,104
|
)
|
||
Net cash (used in) financing activities
|
(7,247
|
)
|
|
(135,413
|
)
|
||
Effect of exchange rate changes on cash
|
(7,093
|
)
|
|
4,606
|
|
||
Net increase (decrease) in cash and cash equivalents
|
129,985
|
|
|
(10,120
|
)
|
||
Cash and cash equivalents at beginning of year
|
822,137
|
|
|
884,886
|
|
||
Cash and cash equivalents at end of period
|
$
|
952,122
|
|
|
$
|
874,766
|
|
|
|
Three Months Ended
|
||||||
|
|
September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Net sales
|
|
|
|
|
||||
Diversified Industrial:
|
|
|
|
|
||||
North America
|
|
$
|
1,681,044
|
|
|
$
|
1,594,691
|
|
International
|
|
1,233,766
|
|
|
1,238,774
|
|
||
Aerospace Systems
|
|
564,484
|
|
|
531,186
|
|
||
Total net sales
|
|
$
|
3,479,294
|
|
|
$
|
3,364,651
|
|
Segment operating income
|
|
|
|
|
||||
Diversified Industrial:
|
|
|
|
|
||||
North America
|
|
$
|
275,111
|
|
|
$
|
256,027
|
|
International
|
|
206,094
|
|
|
191,791
|
|
||
Aerospace Systems
|
|
109,855
|
|
|
77,434
|
|
||
Total segment operating income
|
|
591,060
|
|
|
525,252
|
|
||
Corporate general and administrative expenses
|
|
50,325
|
|
|
41,350
|
|
||
Income before interest expense and other expense
|
|
540,735
|
|
|
483,902
|
|
||
Interest expense
|
|
44,339
|
|
|
53,555
|
|
||
Other expense
|
|
36,673
|
|
|
56,045
|
|
||
Income before income taxes
|
|
$
|
459,723
|
|
|
$
|
374,302
|
|
|
|
Three Months Ended
|
||
|
|
September 30, 2018
|
||
Motion Systems
|
|
$
|
859,573
|
|
Flow and Process Control
|
|
1,061,064
|
|
|
Filtration and Engineered Materials
|
|
994,173
|
|
|
Total
|
|
$
|
2,914,810
|
|
|
|
Three Months Ended
|
||
|
|
September 30, 2018
|
||
Flight Control Actuation
|
|
$
|
162,936
|
|
Fuel and Inerting
|
|
144,046
|
|
|
Hydraulics
|
|
102,497
|
|
|
Engines
|
|
64,386
|
|
|
Fluid Conveyance
|
|
70,204
|
|
|
Other
|
|
20,415
|
|
|
Total
|
|
$
|
564,484
|
|
|
|
Three Months Ended
|
||
|
|
September 30, 2018
|
||
North America
|
|
$
|
2,246,091
|
|
Europe
|
|
726,310
|
|
|
Asia Pacific
|
|
461,640
|
|
|
Latin America
|
|
45,253
|
|
|
Total
|
|
$
|
3,479,294
|
|
|
|
September 30, 2018
|
||
Contract assets, current (included within Prepaid expenses and other)
|
|
$
|
16,634
|
|
Contract assets, noncurrent (included within Investments and other assets)
|
|
2,098
|
|
|
Total contract assets
|
|
18,732
|
|
|
Contract liabilities, current (included within Other accrued liabilities)
|
|
(62,520
|
)
|
|
Contract liabilities, noncurrent (included within Other liabilities)
|
|
(535
|
)
|
|
Total contract liabilities
|
|
(63,055
|
)
|
|
Net contract (liabilities)
|
|
$
|
(44,323
|
)
|
|
|
Balance as of
|
|
Cumulative Effect
|
|
Balance as of
|
||||||
|
|
June 30, 2018
|
|
of Adjustments
|
|
July 1, 2018
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Trade accounts receivable, net
|
|
$
|
2,145,517
|
|
|
$
|
(11
|
)
|
|
$
|
2,145,506
|
|
Inventories
|
|
1,621,304
|
|
|
23,205
|
|
|
1,644,509
|
|
|||
Prepaid expenses and other
|
|
134,886
|
|
|
14,575
|
|
|
149,461
|
|
|||
Investments and other assets
|
|
801,049
|
|
|
2,020
|
|
|
803,069
|
|
|||
Liabilities:
|
|
|
|
|
|
|
||||||
Other accrued liabilities
|
|
$
|
502,333
|
|
|
$
|
28,288
|
|
|
$
|
530,621
|
|
Other liabilities
|
|
526,089
|
|
|
5,160
|
|
|
531,249
|
|
|||
Deferred income taxes
|
|
234,858
|
|
|
1,560
|
|
|
236,418
|
|
|||
Equity:
|
|
|
|
|
|
|
||||||
Retained earnings
|
|
$
|
11,625,975
|
|
|
$
|
4,781
|
|
|
$
|
11,630,756
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Numerator:
|
|
|
|
||||
Net income attributable to common shareholders
|
$
|
375,711
|
|
|
$
|
285,397
|
|
Denominator:
|
|
|
|
||||
Basic - weighted average common shares
|
132,361,654
|
|
|
133,176,964
|
|
||
Increase in weighted average common shares from dilutive effect of equity-based awards
|
2,302,842
|
|
|
2,617,306
|
|
||
Diluted - weighted average common shares, assuming exercise of equity-based awards
|
134,664,496
|
|
|
135,794,270
|
|
||
Basic earnings per share
|
$
|
2.84
|
|
|
$
|
2.14
|
|
Diluted earnings per share
|
$
|
2.79
|
|
|
$
|
2.10
|
|
|
|
September 30,
2018 |
|
June 30,
2018 |
||||
Notes receivable
|
|
$
|
135,707
|
|
|
$
|
149,254
|
|
Accounts receivable, other
|
|
176,455
|
|
|
179,145
|
|
||
Total
|
|
$
|
312,162
|
|
|
$
|
328,399
|
|
|
|
September 30,
2018 |
|
June 30,
2018 |
||||
Finished products
|
|
$
|
704,313
|
|
|
$
|
673,323
|
|
Work in process
|
|
861,279
|
|
|
765,835
|
|
||
Raw materials
|
|
197,048
|
|
|
182,146
|
|
||
Total
|
|
$
|
1,762,640
|
|
|
$
|
1,621,304
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Diversified Industrial
|
$
|
8,558
|
|
|
$
|
13,263
|
|
Aerospace Systems
|
—
|
|
|
763
|
|
||
Other expense
|
55
|
|
|
—
|
|
|
Three Months Ended
|
||||
|
September 30,
|
||||
|
2018
|
|
2017
|
||
Diversified Industrial
|
201
|
|
|
542
|
|
Aerospace Systems
|
—
|
|
|
37
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cost of sales
|
$
|
4,399
|
|
|
$
|
9,115
|
|
Selling, general and administrative expenses
|
4,159
|
|
|
4,911
|
|
||
Other (income), net
|
55
|
|
|
—
|
|
|
Common Stock
|
|
Additional Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive (Loss)
|
|
Treasury Shares
|
|
Noncontrolling
Interests
|
|
Total Equity
|
||||||||||||||
Balance at June 30, 2018
|
$
|
90,523
|
|
|
$
|
496,592
|
|
|
$
|
11,625,975
|
|
|
$
|
(1,763,086
|
)
|
|
$
|
(4,590,138
|
)
|
|
$
|
5,627
|
|
|
$
|
5,865,493
|
|
Impact of adoption of accounting standards
|
|
|
|
|
|
|
1,483
|
|
|
(1,734
|
)
|
|
|
|
|
|
|
|
(251
|
)
|
|||||||
Net income
|
|
|
|
|
|
|
375,711
|
|
|
|
|
|
|
|
|
188
|
|
|
375,899
|
|
|||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
(11,163
|
)
|
|
|
|
|
(89
|
)
|
|
(11,252
|
)
|
|||||||
Dividends paid ($0.76 per share)
|
|
|
|
|
|
|
(100,869
|
)
|
|
|
|
|
|
|
|
|
|
(100,869
|
)
|
||||||||
Stock incentive plan activity
|
|
|
|
6,460
|
|
|
|
|
|
|
|
|
21,626
|
|
|
|
|
|
28,086
|
|
|||||||
Shares purchased at cost
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
|
(50,000
|
)
|
|||||||
Balance at September 30, 2018
|
$
|
90,523
|
|
|
$
|
503,052
|
|
|
$
|
11,902,300
|
|
|
$
|
(1,775,983
|
)
|
|
$
|
(4,618,512
|
)
|
|
$
|
5,726
|
|
|
$
|
6,107,106
|
|
|
Common Stock
|
|
Additional Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive (Loss)
|
|
Treasury Shares
|
|
Noncontrolling
Interests
|
|
Total Equity
|
||||||||||||||
Balance at June 30, 2017
|
$
|
90,523
|
|
|
$
|
543,879
|
|
|
$
|
10,930,348
|
|
|
$
|
(1,924,204
|
)
|
|
$
|
(4,378,897
|
)
|
|
$
|
5,697
|
|
|
$
|
5,267,346
|
|
Net income
|
|
|
|
|
|
|
285,397
|
|
|
|
|
|
|
|
|
138
|
|
|
285,535
|
|
|||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
99,701
|
|
|
|
|
|
(87
|
)
|
|
99,614
|
|
|||||||
Dividends paid ($0.66 per share)
|
|
|
|
|
|
|
(88,104
|
)
|
|
|
|
|
|
|
|
|
|
|
(88,104
|
)
|
|||||||
Stock incentive plan activity
|
|
|
|
(14,923
|
)
|
|
|
|
|
|
|
|
31,220
|
|
|
|
|
16,297
|
|
||||||||
Acquisition activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29
|
)
|
|
(29
|
)
|
|||||||
Shares purchased at cost
|
|
|
|
|
|
|
|
|
|
|
|
|
(50,000
|
)
|
|
|
|
(50,000
|
)
|
||||||||
Balance at September 30, 2017
|
$
|
90,523
|
|
|
$
|
528,956
|
|
|
$
|
11,127,641
|
|
|
$
|
(1,824,503
|
)
|
|
$
|
(4,397,677
|
)
|
|
$
|
5,719
|
|
|
$
|
5,530,659
|
|
|
Foreign Currency Translation Adjustment and Other
|
|
Retirement Benefit Plans
|
|
Total
|
||||||
Balance at June 30, 2018
|
$
|
(943,477
|
)
|
|
$
|
(819,609
|
)
|
|
$
|
(1,763,086
|
)
|
Impact of adoption of ASU 2016-01
|
(1,734
|
)
|
|
—
|
|
|
(1,734
|
)
|
|||
Other comprehensive income before reclassifications
|
(38,614
|
)
|
|
—
|
|
|
(38,614
|
)
|
|||
Amounts reclassified from accumulated other comprehensive (loss)
|
3,578
|
|
|
23,873
|
|
|
27,451
|
|
|||
Balance at September 30, 2018
|
$
|
(980,247
|
)
|
|
$
|
(795,736
|
)
|
|
$
|
(1,775,983
|
)
|
|
Foreign Currency Translation Adjustment and Other
|
|
Retirement Benefit Plans
|
|
Total
|
||||||
Balance at June 30, 2017
|
$
|
(925,342
|
)
|
|
$
|
(998,862
|
)
|
|
$
|
(1,924,204
|
)
|
Other comprehensive (loss) before reclassifications
|
72,966
|
|
|
—
|
|
|
72,966
|
|
|||
Amounts reclassified from accumulated other comprehensive (loss)
|
—
|
|
|
26,735
|
|
|
26,735
|
|
|||
Balance at September 30, 2017
|
$
|
(852,376
|
)
|
|
$
|
(972,127
|
)
|
|
$
|
(1,824,503
|
)
|
Details about Accumulated Other Comprehensive (Loss) Components
|
|
Income (Expense) Reclassified from Accumulated Other Comprehensive (Loss)
|
Consolidated Statement of Income Classification
|
|||
|
|
Three Months Ended
|
|
|
||
|
|
September 30, 2018
|
|
|
||
Retirement benefit plans
|
|
|
|
|
||
Amortization of prior service cost and initial net obligation
|
|
$
|
(1,641
|
)
|
|
See Note 12
|
Recognized actuarial loss
|
|
(29,297
|
)
|
|
See Note 12
|
|
Total before tax
|
|
(30,938
|
)
|
|
|
|
Tax benefit
|
|
7,065
|
|
|
Income taxes
|
|
Net of tax
|
|
$
|
(23,873
|
)
|
|
|
Details about Accumulated Other Comprehensive (Loss) Components
|
|
Income (Expense) Reclassified from Accumulated Other Comprehensive (Loss)
|
Consolidated Statement of Income Classification
|
|||
|
|
Three Months Ended
|
|
|
||
|
|
September 30, 2017
|
|
|
||
Retirement benefit plans
|
|
|
|
|
||
Amortization of prior service cost and initial net obligation
|
|
$
|
(2,133
|
)
|
|
See Note 12
|
Recognized actuarial loss
|
|
(39,036
|
)
|
|
See Note 12
|
|
Total before tax
|
|
(41,169
|
)
|
|
|
|
Tax benefit
|
|
14,434
|
|
|
Income taxes
|
|
Net of tax
|
|
$
|
(26,735
|
)
|
|
|
|
Diversified Industrial
Segment
|
|
Aerospace
Systems
Segment
|
|
Total
|
||||||
Balance at June 30, 2018
|
$
|
5,405,771
|
|
|
$
|
98,649
|
|
|
$
|
5,504,420
|
|
Acquisition
|
3,753
|
|
|
—
|
|
|
3,753
|
|
|||
Foreign currency translation and other
|
(23,026
|
)
|
|
(3
|
)
|
|
(23,029
|
)
|
|||
Balance at September 30, 2018
|
$
|
5,386,498
|
|
|
$
|
98,646
|
|
|
$
|
5,485,144
|
|
|
September 30, 2018
|
|
June 30, 2018
|
||||||||||||
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Patents
|
$
|
264,826
|
|
|
$
|
121,067
|
|
|
$
|
265,423
|
|
|
$
|
117,440
|
|
Trademarks
|
545,811
|
|
|
233,800
|
|
|
546,905
|
|
|
227,580
|
|
||||
Customer lists and other
|
2,472,727
|
|
|
972,396
|
|
|
2,482,079
|
|
|
933,867
|
|
||||
Total
|
$
|
3,283,364
|
|
|
$
|
1,327,263
|
|
|
$
|
3,294,407
|
|
|
$
|
1,278,887
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Service cost
|
$
|
20,509
|
|
|
$
|
23,058
|
|
Interest cost
|
39,866
|
|
|
35,686
|
|
||
Expected return on plan assets
|
(62,877
|
)
|
|
(63,176
|
)
|
||
Amortization of prior service cost
|
1,648
|
|
|
2,104
|
|
||
Amortization of net actuarial loss
|
29,293
|
|
|
38,682
|
|
||
Amortization of initial net obligation
|
4
|
|
|
5
|
|
||
Net pension benefit cost
|
$
|
28,443
|
|
|
$
|
36,359
|
|
|
|
September 30,
2018 |
|
June 30,
2018 |
||||
Carrying value of long-term debt
|
|
$
|
4,354,050
|
|
|
$
|
4,460,402
|
|
Estimated fair value of long-term debt
|
|
4,399,405
|
|
|
4,548,796
|
|
|
|
Balance Sheet Caption
|
|
September 30,
2018 |
|
June 30,
2018 |
||||
Net investment hedges
|
|
|
|
|
|
|
||||
Cross-currency swap contracts
|
|
Other assets
|
|
$
|
9,598
|
|
|
$
|
7,614
|
|
Cash flow hedges
|
|
|
|
|
|
|
||||
Costless collar contracts
|
|
Non-trade and notes receivable
|
|
1,125
|
|
|
932
|
|
||
Costless collar contracts
|
|
Other accrued liabilities
|
|
2,777
|
|
|
236
|
|
|
Three Months Ended
|
||||||
|
September 30,
|
||||||
|
2018
|
|
2017
|
||||
Cross-currency swap contracts
|
$
|
1,920
|
|
|
$
|
(6,574
|
)
|
Foreign denominated debt
|
4,127
|
|
|
(16,834
|
)
|
|
|
|
|
Quoted Prices
|
|
|
Significant Other
|
|
|
Significant
|
|
|||||
|
|
Fair
|
|
|
In Active
|
|
|
Observable
|
|
|
Unobservable
|
|
||||
|
|
Value at
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
||||
|
|
September 30, 2018
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
|
$
|
22,262
|
|
|
$
|
22,262
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds
|
|
4,937
|
|
|
4,937
|
|
|
—
|
|
|
—
|
|
||||
Asset-backed and mortgage-backed securities
|
|
3,673
|
|
|
—
|
|
|
3,673
|
|
|
—
|
|
||||
Derivatives
|
|
16,716
|
|
|
—
|
|
|
16,716
|
|
|
—
|
|
||||
Investments measured at net asset value
|
|
9,914
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
9,851
|
|
|
—
|
|
|
9,851
|
|
|
—
|
|
|
|
|
|
Quoted Prices
|
|
|
Significant Other
|
|
|
Significant
|
|
|||||
|
|
Fair
|
|
|
In Active
|
|
|
Observable
|
|
|
Unobservable
|
|
||||
|
|
Value at
|
|
|
Markets
|
|
|
Inputs
|
|
|
Inputs
|
|
||||
|
|
June 30, 2018
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
|
$
|
2,956
|
|
|
$
|
2,956
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Corporate bonds
|
|
5,331
|
|
|
5,331
|
|
|
—
|
|
|
—
|
|
||||
Asset-backed and mortgage-backed securities
|
|
3,911
|
|
|
—
|
|
|
3,911
|
|
|
—
|
|
||||
Derivatives
|
|
14,110
|
|
|
—
|
|
|
14,110
|
|
|
—
|
|
||||
Investments measured at net asset value
|
|
7,208
|
|
|
|
|
|
|
|
|||||||
Liabilities:
|
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
|
5,315
|
|
|
—
|
|
|
5,315
|
|
|
—
|
|
•
|
Purchasing Managers Index (PMI) on manufacturing activity specific to regions around the world with respect to most mobile and industrial markets;
|
•
|
Global aircraft miles flown and global revenue passenger miles for commercial aerospace markets and Department of Defense spending for military aerospace markets; and
|
•
|
Housing starts with respect to the North American residential air conditioning market and certain mobile construction markets.
|
|
September 30, 2018
|
|
|
June 30, 2018
|
|
|
September 30, 2017
|
|
United States
|
59.8
|
|
|
60.2
|
|
|
60.8
|
|
Eurozone countries
|
53.2
|
|
|
54.9
|
|
|
58.1
|
|
China
|
50.0
|
|
|
51.0
|
|
|
51.0
|
|
Brazil
|
50.9
|
|
|
49.8
|
|
|
50.9
|
|
•
|
Serving the customer and continuously enhancing its experience with the Company;
|
•
|
Successfully executing its Win Strategy initiatives relating to engaged people, premier customer experience, profitable growth and financial performance;
|
•
|
Maintaining its decentralized division and sales company structure;
|
•
|
Fostering a safety first and entrepreneurial culture;
|
•
|
Engineering innovative systems and products to provide superior customer value through improved service, efficiency and productivity;
|
•
|
Delivering products, systems and services that have demonstrable savings to customers and are priced by the value they deliver;
|
•
|
Acquiring strategic businesses;
|
•
|
Organizing around targeted regions, technologies and markets;
|
•
|
Driving efficiency by implementing lean enterprise principles; and
|
•
|
Creating a culture of empowerment through its values, inclusion and diversity, accountability and teamwork.
|
|
|
Three Months Ended
September 30,
|
||||||
(dollars in millions)
|
|
2018
|
|
2017
|
||||
Net sales
|
|
$
|
3,479.3
|
|
|
$
|
3,364.7
|
|
Gross profit margin
|
|
25.4
|
%
|
|
25.0
|
%
|
||
Selling, general and administrative expenses
|
|
$
|
394.3
|
|
|
$
|
397.0
|
|
Selling, general and administrative expenses, as a percent of sales
|
|
11.3
|
%
|
|
11.8
|
%
|
||
Interest expense
|
|
$
|
44.3
|
|
|
$
|
53.6
|
|
Other (income) expense, net
|
|
$
|
(13.9
|
)
|
|
$
|
16.5
|
|
Effective tax rate
|
|
18.2
|
%
|
|
23.7
|
%
|
||
Net income
|
|
$
|
375.9
|
|
|
$
|
285.5
|
|
Net income, as a percent of sales
|
|
10.8
|
%
|
|
8.5
|
%
|
(dollars in millions)
|
|
Three Months Ended
September 30, |
||||||
Expense (income)
|
|
2018
|
|
2017
|
||||
Income related to equity method investments
|
|
$
|
(22.8
|
)
|
|
$
|
(6.9
|
)
|
Non-service components of retirement benefit cost
|
|
8.5
|
|
|
14.3
|
|
||
Sale of investment
|
|
—
|
|
|
13.8
|
|
||
Other items, net
|
|
0.4
|
|
|
(4.7
|
)
|
||
|
|
$
|
(13.9
|
)
|
|
$
|
16.5
|
|
|
|
Three Months Ended
September 30, |
||||||
(dollars in millions)
|
|
2018
|
|
2017
|
||||
Net sales
|
|
|
|
|
||||
North America
|
|
$
|
1,681.0
|
|
|
$
|
1,594.7
|
|
International
|
|
1,233.8
|
|
|
1,238.8
|
|
||
Operating income
|
|
|
|
|
||||
North America
|
|
275.1
|
|
|
256.0
|
|
||
International
|
|
$
|
206.1
|
|
|
$
|
191.8
|
|
Operating margin
|
|
|
|
|
||||
North America
|
|
16.4
|
%
|
|
16.1
|
%
|
||
International
|
|
16.7
|
%
|
|
15.5
|
%
|
||
Backlog
|
|
$
|
2,168.2
|
|
|
$
|
1,986.9
|
|
|
|
Three Months Ended September 30, 2018
|
|
|
|
Three Months
|
|
Diversified Industrial North America – as reported
|
|
5.4
|
%
|
Divestitures
|
|
(0.5
|
)%
|
Currency
|
|
(0.3
|
)%
|
Diversified Industrial North America – without divestitures and currency
|
|
6.2
|
%
|
|
|
|
|
Diversified Industrial International – as reported
|
|
(0.4
|
)%
|
Divestitures
|
|
(0.9
|
)%
|
Currency
|
|
(4.1
|
)%
|
Diversified Industrial International – without divestitures and currency
|
|
4.6
|
%
|
|
|
|
|
Total Diversified Industrial Segment – as reported
|
|
2.9
|
%
|
Divestitures
|
|
(0.6
|
)%
|
Currency
|
|
(2.0
|
)%
|
Total Diversified Industrial Segment – without divestitures and currency
|
|
5.5
|
%
|
|
|
Three Months Ended
September 30, |
||||||
(dollars in millions)
|
|
2018
|
|
2017
|
||||
Diversified Industrial North America
|
|
$
|
4.8
|
|
|
$
|
10.1
|
|
Diversified Industrial International
|
|
3.8
|
|
|
3.2
|
|
|
|
Three Months Ended
March 31,
|
||||||
(dollars in millions)
|
|
2018
|
|
2017
|
||||
Net sales
|
|
$
|
564.5
|
|
|
$
|
531.2
|
|
Operating income
|
|
$
|
109.9
|
|
|
$
|
77.4
|
|
Operating margin
|
|
19.5
|
%
|
|
14.6
|
%
|
||
Backlog
|
|
$
|
1,921.7
|
|
|
$
|
1,816.4
|
|
(dollars in millions)
|
|
Three Months Ended
September 30, |
||||||
Expense (income)
|
|
2018
|
|
2017
|
||||
Foreign currency transaction
|
|
$
|
3.5
|
|
|
$
|
3.6
|
|
Stock-based compensation
|
|
28.5
|
|
|
25.9
|
|
||
Pensions
|
|
5.3
|
|
|
8.5
|
|
||
Sale of investment
|
|
—
|
|
|
13.8
|
|
||
Other items, net
|
|
(0.6
|
)
|
|
4.2
|
|
||
|
|
$
|
36.7
|
|
|
$
|
56.0
|
|
(dollars in millions)
|
|
September 30,
2018
|
|
June 30,
2018
|
||||
Cash
|
|
$
|
992.9
|
|
|
$
|
855.1
|
|
Trade accounts receivable, net
|
|
2,065.2
|
|
|
2,145.5
|
|
||
Inventories
|
|
1,762.6
|
|
|
1,621.3
|
|
||
Shareholders’ equity
|
|
6,101.4
|
|
|
5,859.9
|
|
||
Working capital
|
|
1,989.6
|
|
|
1,887.8
|
|
||
Current ratio
|
|
1.60
|
|
|
1.59
|
|
|
|
Three Months Ended
September 30,
|
||||||
(dollars in millions)
|
|
2018
|
|
2017
|
||||
Cash provided by (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
159.4
|
|
|
$
|
238.0
|
|
Investing activities
|
|
(15.1
|
)
|
|
(117.3
|
)
|
||
Financing activities
|
|
(7.2
|
)
|
|
(135.4
|
)
|
||
Effect of exchange rates
|
|
(7.1
|
)
|
|
4.6
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
$
|
130.0
|
|
|
$
|
(10.1
|
)
|
Fitch Ratings
|
|
A-
|
Moody's Investor Services, Inc.
|
|
Baa1
|
Standard & Poor's
|
|
A
|
•
|
changes in business relationships with and purchases by or from major customers, suppliers or distributors, including delays or cancellations in shipments;
|
•
|
disputes regarding contract terms or significant changes in financial condition, changes in contract cost and revenue estimates for new development programs, and changes in product mix;
|
•
|
ability to identify acceptable strategic acquisition targets; uncertainties surrounding timing, successful completion or integration of acquisitions and similar transactions, including the integration of CLARCOR Inc.; ability to successfully divest businesses planned for divestiture and realize the anticipated benefits of such divestitures;
|
•
|
the determination to undertake business realignment activities and the expected costs thereof and, if undertaken, the ability to complete such activities and realize the anticipated cost savings from such activities;
|
•
|
ability to implement successfully the capital allocation initiatives, including timing, price and execution of share repurchases;
|
•
|
availability, limitations or cost increases of raw materials, component products and/or commodities that cannot be recovered in product pricing;
|
•
|
ability to manage costs related to insurance and employee retirement and health care benefits;
|
•
|
compliance costs associated with environmental laws and regulations;
|
•
|
potential labor disruptions;
|
•
|
threats associated with and efforts to combat terrorism and cyber-security risks;
|
•
|
uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals;
|
•
|
global competitive market conditions, including global reactions to U.S. trade policies, and resulting effects on sales and pricing; and
|
•
|
global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability.
|
(a)
|
Unregistered Sales of Equity Securities.
Not applicable.
|
(b)
|
Use of Proceeds.
Not applicable.
|
(c)
|
Issuer Purchases of Equity Securities.
|
Period
|
|
(a) Total
Number of
Shares
Purchased
|
|
(b) Average
Price Paid
Per Share
|
|
(c) Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs (1)
|
|
(d) Maximum Number
(or Approximate Dollar
Value) of Shares that
May Yet Be Purchased
Under the Plans or
Programs (1)
|
|||||
July 1, 2018 through July 31, 2018
|
|
104,100
|
|
|
$
|
159.62
|
|
|
104,100
|
|
|
15,497,993
|
|
August 1, 2018 through August 31, 2018
|
|
107,800
|
|
|
$
|
170.27
|
|
|
107,800
|
|
|
15,390,193
|
|
September 1, 2018 through September 30, 2018
|
|
82,041
|
|
|
$
|
183.11
|
|
|
82,041
|
|
|
15,308,152
|
|
Total:
|
|
293,941
|
|
|
$
|
170.08
|
|
|
293,941
|
|
|
|
|
(1)
|
On October 22, 2014, the Company publicly announced that the Board of Directors increased the overall maximum number of shares authorized for repurchase under the Company's share repurchase program, first announced on August 16, 1990, so that, beginning on October 22, 2014, the maximum aggregate number of shares authorized for repurchase was 35 million shares. There is no limitation on the amount of shares that can be repurchased in a fiscal year. There is no expiration date for this program.
|
Exhibit
No.
|
|
Description of Exhibit
|
|
|
|
3(c)
|
|
|
|
|
|
10(a)
|
|
|
|
|
|
10(b)
|
|
|
|
|
|
10(c)
|
|
|
|
|
|
31(a)
|
|
|
|
|
|
31(b)
|
|
|
|
|
|
32
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.*
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.*
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.*
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document. *
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.*
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.*
|
*
|
Submitted electronically herewith.
|
|
|
|
|
|
PARKER-HANNIFIN CORPORATION
|
|
|
(Registrant)
|
|
|
|
|
|
/s/ Catherine A. Suever
|
|
|
Catherine A. Suever
|
|
|
Executive Vice President - Finance & Administration and
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
Date:
|
November 7, 2018
|
|
Parker-Hannifin Corporation
|
Code of Regulations
|
Cleveland, Ohio
(An Ohio Corporation)
|
Revised October 2007
Amended October 26, 2016
Amended October 24, 2018
|
▪
|
Active employees
: Update your address and contact information directly through your Personal Profile section in the Employee Self-Service site.
|
▪
|
Retired, terminated or family member of deceased participant
: Contact the Benefits Service Center at 1-800-992-5564.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Parker-Hannifin Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
/s/ Thomas L. Williams
|
|
Thomas L. Williams
|
|
Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Parker-Hannifin Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
|
4.
|
The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
5.
|
The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
|
/s/ Catherine A. Suever
|
|
Catherine A. Suever
|
|
Executive Vice President - Finance &
|
|
Administration and Chief Financial Officer
|
|
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.
|
|
/s/ Thomas L. Williams
|
|
Name: Thomas L. Williams
|
|
Title: Chief Executive Officer
|
|
|
|
/s/ Catherine A. Suever
|
|
Name: Catherine A. Suever
|
|
Title: Executive Vice President - Finance &
|
|
Administration and Chief Financial Officer
|
|
|