☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Ohio
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34-0117420
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1 Applied Plaza
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Cleveland
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Ohio
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44115
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(Address of Principal Executive Offices)
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(Zip Code)
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, without par value
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AIT
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New York Stock Exchange
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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PART I
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Business
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Risk Factors
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Unresolved Staff Comments
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Properties
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Legal Proceedings
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Mine Safety Disclosures
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PART II
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Selected Financial Data
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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Quantitative and Qualitative Disclosures about Market Risk
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Financial Statements and Supplementary Data
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Controls and Procedures
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Other Information
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PART III
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Directors, Executive Officers and Corporate Governance
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Executive Compensation
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Certain Relationships and Related Transactions, and Director Independence
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Principal Accountant Fees and Services
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PART IV
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Exhibits and Financial Statement Schedules
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Form 10-K Summary
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•
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Applied's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports, together with Section 16 insider beneficial stock ownership reports - these documents are posted as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission
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•
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Applied's Code of Business Ethics
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•
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Applied's Board of Directors Governance Principles and Practices
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•
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Applied's Director Independence Standards
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•
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Charters for the Audit, Corporate Governance, and Executive Organization & Compensation Committees of Applied's Board of Directors
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•
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Capture market share across our core service center network. Our network of service centers located close to industrial companies allows us to respond quickly and effectively to critical MRO situations involving direct production infrastructure and industrial equipment. We believe more sophisticated industrial production processes, customer labor constraints, and increased manufacturing activity across North America could drive greater demand for our products and services. We continue to deploy initiatives to further enhance our capabilities across our service center network and gain market share. These include investments in analytics, strategic account penetration, sales process optimization, talent development, and digital capabilities, as well as fully leveraging and cross-selling our expanded product and service platform across fluid power, flow control, automation, and consumables solutions.
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•
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Extend our leading fluid power and flow control position as demand for comprehensive solutions grows. We provide innovative fluid power and flow control solutions including systems design and engineering, electronic control integration, software programing, valve actuation, compliance consulting, fabrication and assembly, and dedicated service and repair. Demand for these solutions is increasing across a variety of industrial, off-highway mobile, technology, and process related applications given a greater focus on power consumption, plant efficiency and automation, emissions control, remote monitoring, advancements in machining, regulatory and compliance standards, and data analytics. We believe our service and engineering capabilities, shop network, and supplier relationships are key competitive advantages supporting our ability to capture a greater share of this market growth opportunity in coming years.
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•
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Leverage technical industry position in developing growth around emerging industrial technologies. We believe we are positioned to capture emerging opportunities relating to automation and smart technologies focused on optimizing and connecting customers’ industrial supply chains. Our position reflects our technical product focus, service capabilities, embedded customer relationships and knowledge across direct production infrastructure and equipment, and existing supplier relationships. Following our acquisition of Olympus Controls in fiscal 2020, we now offer products and solutions focused on the design, assembly, integration, and distribution of motion control, machine vision, and robotic technologies. We expect to continue to expand our automation footprint and capabilities in coming years, as well as pursue opportunities tied to the Industrial Internet of Things (IIoT). We believe this market potential could be meaningful as technology continues to converge within traditional industrial supply chains and end-markets.
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•
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Execute ongoing operational initiatives supporting margin profile. We have a number of initiatives focused on driving operational improvements throughout the organization. Systems investments in recent years including common ERP platforms are supporting opportunities in leveraging shared services, refining our sales management process, and standardizing pricing and sourcing functions, while we continue to optimize our shop and distribution network and analytics. We also remain focused on achieving margin synergies across our operations following expansion into flow control and automation. This includes enhanced pricing functions, leveraging vendor procurement, freight savings, and refined cost management. Combined with growth in more profitable areas of our business, we see ongoing opportunity to optimize our margin profile and cash generation in coming years.
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•
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Pursue acquisitions to supplement growth and strengthen industry position. We expect to pursue additional acquisitions aligned with our growth strategy and long-term financial targets. We view acquisitions
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•
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changes in customer preferences for products and services of the nature, brands, quality, or cost sold by us;
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•
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changes in customer procurement policies and practices;
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•
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changes in the market prices for products and services relative to the costs of providing them;
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•
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changes in operating expenses;
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•
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organizational changes in the Company;
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•
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government regulation, legislation, or policies, including with respect to federal tax policy, international trade, data privacy and security, and government contracting;
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•
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the variability and timing of new business opportunities including acquisitions, customer relationships, and supplier authorizations;
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•
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the incurrence of debt and contingent liabilities in connection with acquisitions; and
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•
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changes in accounting policies and practices that could impact our financial reporting and increase compliance costs.
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Name
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Positions and Experience
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Age
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Neil A. Schrimsher
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President since 2013 and Chief Executive Officer since 2011.
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56
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Fred D. Bauer
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Vice President-General Counsel & Secretary since 2002.
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54
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Warren E. Hoffner
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Vice President, General Manager-Fluid Power & Flow Control since October 2018. He served as Vice President, General Manager-Fluid Power from 2003 to October 2018. The Board of Directors designated Mr. Hoffner an executive officer in October 2015.
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60
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Kurt W. Loring
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Vice President-Chief Human Resources Officer since 2014.
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51
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David K. Wells
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Vice President-Chief Financial Officer & Treasurer since September 2017. He served as Vice President-Finance from May 2017 through August 2017. Prior to joining Applied, from 2015 to May 2017, Mr. Wells was Vice President & Chief Financial Officer of ESAB, a manufacturer of welding and material cutting products and a division of Colfax Corporation (NYSE: CFX). Prior to then he was Vice President & Chief Financial Officer of Apex Tool Group, a manufacturer of hand and power tools.
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57
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Period
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(a) Total Number of Shares
|
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(b) Average Price Paid per Share ($)
|
|
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(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
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(d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
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April 1, 2020 to April 30, 2020
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0
|
|
—
|
|
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0
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864,618
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May 1, 2020 to May 31, 2020
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0
|
|
—
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|
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0
|
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864,618
|
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June 1, 2020 to June 30, 2020
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0
|
|
—
|
|
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0
|
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864,618
|
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Total
|
0
|
|
—
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|
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0
|
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864,618
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(1)
|
On October 24, 2016, the Board of Directors authorized the repurchase of up to 1.5 million shares of the Company's common stock, replacing the prior authorization. We publicly announced the new authorization on October 26, 2016. Purchases can be made in the open market or in privately negotiated transactions. The authorization is in effect until all shares are purchased, or the Board revokes or amends the authorization.
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(In thousands, except per share amounts and statistical data)
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|
2020
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2019
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2018 (c)
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2017
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2016
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||||||||||
Consolidated Operations — Year Ended June 30
|
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||||||||||
Net sales
|
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$
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3,245,652
|
|
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$
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3,472,739
|
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$
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3,073,274
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$
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2,593,746
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$
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2,519,428
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Depreciation and amortization of property
|
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21,196
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20,236
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17,798
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15,306
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|
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15,966
|
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|||||
Amortization:
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||||||||||
Intangible assets
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41,553
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41,883
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32,065
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|
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24,371
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|
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25,580
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|||||
SARs and stock options
|
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2,954
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|
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2,437
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|
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1,961
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|
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1,891
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|
|
1,543
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|
|||||
Operating income (a) (b) (e)
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88,989
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|
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233,788
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|
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225,827
|
|
|
175,386
|
|
|
89,782
|
|
|||||
Net income (a) (b) (d) (e)
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|
24,042
|
|
|
143,993
|
|
|
141,625
|
|
|
133,910
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|
|
29,577
|
|
|||||
Per share data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income:
|
|
|
|
|
|
|
|
|
|
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||||||||||
Basic
|
|
0.62
|
|
|
3.72
|
|
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3.65
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|
|
3.43
|
|
|
0.75
|
|
|||||
Diluted (a) (b) (d) (e)
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|
0.62
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|
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3.68
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|
|
3.61
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|
|
3.40
|
|
|
0.75
|
|
|||||
Cash dividend
|
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1.26
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1.22
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|
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1.18
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|
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1.14
|
|
|
1.10
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|
|||||
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||||||||||
Year-End Position — June 30
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||||||||||
Working capital
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$
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733,686
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|
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$
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724,344
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|
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$
|
625,469
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|
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$
|
572,789
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|
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$
|
507,238
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Long-term debt (including portion classified as current)
|
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935,276
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|
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959,829
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|
|
966,063
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|
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291,982
|
|
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328,334
|
|
|||||
Total assets
|
|
2,283,551
|
|
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2,331,697
|
|
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2,285,741
|
|
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1,387,595
|
|
|
1,312,025
|
|
|||||
Shareholders’ equity
|
|
843,542
|
|
|
897,034
|
|
|
814,963
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|
|
745,256
|
|
|
657,916
|
|
|||||
|
|
|
|
|
|
|
|
|
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|
||||||||||
Year-End Statistics — June 30
|
|
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|
|
|
|
|
|
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|
||||||||||
Current ratio
|
|
2.7
|
|
|
2.7
|
|
|
2.4
|
|
|
2.8
|
|
|
2.8
|
|
|||||
Operating facilities
|
|
580
|
|
|
600
|
|
|
610
|
|
|
552
|
|
|
559
|
|
|||||
Shareholders of record (f)
|
|
3,772
|
|
|
4,165
|
|
|
4,323
|
|
|
4,687
|
|
|
5,372
|
|
|||||
Return on assets (a) (b) (d) (e) (g)
|
|
1.0
|
%
|
|
6.3
|
%
|
|
8.0
|
%
|
|
10.2
|
%
|
|
2.2
|
%
|
|||||
Return on equity (a) (b) (d) (e) (h)
|
|
2.8
|
%
|
|
16.8
|
%
|
|
18.2
|
%
|
|
19.1
|
%
|
|
4.2
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
$
|
20,115
|
|
|
$
|
18,970
|
|
|
$
|
23,230
|
|
|
$
|
17,045
|
|
|
$
|
13,130
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash Returned to Shareholders During the Year
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends paid
|
|
$
|
48,873
|
|
|
$
|
47,266
|
|
|
$
|
45,858
|
|
|
$
|
44,619
|
|
|
$
|
43,330
|
|
Purchases of treasury shares
|
|
—
|
|
|
11,158
|
|
|
22,778
|
|
|
8,242
|
|
|
37,465
|
|
|||||
Total
|
|
$
|
48,873
|
|
|
$
|
58,424
|
|
|
$
|
68,636
|
|
|
$
|
52,861
|
|
|
$
|
80,795
|
|
(a)
|
A goodwill impairment charge in fiscal 2020 reduced operating income by $131.0 million, net income by $118.8 million, and diluted earnings per share by $3.04. Excluding the goodwill impairment charge, the fiscal 2020 return on assets would be 6.5% and return on equity would be 16.4%.
|
(b)
|
A long-lived intangible asset impairment charge in fiscal 2019 reduced operating income by $31.6 million, net income by $26.9 million, and diluted earnings per share by $0.69, which includes the impact of a $3.8 million valuation allowance on certain Canadian deferred tax assets. Excluding the long-lived intangible asset impairment charge, the fiscal 2019 return on assets would be 7.5% and return on equity would be 20.0%.
|
(c)
|
FY 2018 includes the acquisition of FCX Performance, Inc. from the acquisition date of 1/31/2018.
|
(d)
|
FY 2017 includes a tax benefit pertaining to a worthless stock tax deduction of $22.2 million, or $0.56 per share. Excluding the worthless stock tax deduction, the fiscal 2017 return on assets would be 8.5% and return on equity would be 16.2%.
|
(e)
|
A goodwill impairment charge in fiscal 2016 reduced operating income by $64.8 million, net income by $63.8 million, and diluted earnings per share by $1.62. Excluding the goodwill impairment charge, the fiscal 2016 return on assets would be 6.7% and return on equity would be 12.8%.
|
(f)
|
Includes participant-shareholders in the Applied Industrial Technologies, Inc. Retirement Savings Plan and shareholders in the Company's direct stock purchase program.
|
(g)
|
Return on assets is calculated as net income divided by monthly average assets.
|
(h)
|
Return on equity is calculated as net income divided by the average shareholders’ equity (beginning of the year plus end of
the year divided by 2). |
|
Year Ended June 30,
As a % of Net Sales
|
|
Change in $'s Versus Prior Period
|
|
||||
|
2020
|
|
|
2019
|
|
|
% Change
|
|
Net Sales
|
100.0
|
%
|
|
100.0
|
%
|
|
(6.5
|
)%
|
Gross Profit Margin
|
28.9
|
%
|
|
29.0
|
%
|
|
(6.9
|
)%
|
Selling, Distribution & Administrative
|
22.1
|
%
|
|
21.4
|
%
|
|
(3.3
|
)%
|
Operating Income
|
2.7
|
%
|
|
6.7
|
%
|
|
(61.9
|
)%
|
Net Income
|
0.7
|
%
|
|
4.1
|
%
|
|
(83.3
|
)%
|
Amounts in millions
|
|
|
|
Amount of change due to
|
||||||||||||||
|
Year ended June 30,
|
Sales Decrease
|
|
Acquisitions
|
|
Foreign Currency
|
|
Organic Change
|
|
|||||||||
Sales by Reportable Segment
|
2020
|
|
2019
|
|
||||||||||||||
Service Center Based Distribution
|
$
|
2,242.0
|
|
$
|
2,452.9
|
|
$
|
(210.9
|
)
|
$
|
23.8
|
|
$
|
(10.5
|
)
|
$
|
(224.2
|
)
|
Fluid Power & Flow Control
|
1,003.7
|
|
1,019.8
|
|
(16.1
|
)
|
56.9
|
|
—
|
|
(73.0
|
)
|
||||||
Total
|
$
|
3,245.7
|
|
$
|
3,472.7
|
|
$
|
(227.0
|
)
|
$
|
80.7
|
|
$
|
(10.5
|
)
|
$
|
(297.2
|
)
|
Amounts in millions
|
|
|
|
Amount of change due to
|
||||||||||||||
|
Year ended June 30,
|
Sales Decrease
|
|
Acquisitions
|
|
Foreign Currency
|
|
Organic Change
|
|
|||||||||
Sales by Geographic Area
|
2020
|
|
2019
|
|
||||||||||||||
United States
|
$
|
2,819.4
|
|
$
|
3,016.7
|
|
$
|
(197.3
|
)
|
$
|
80.7
|
|
$
|
—
|
|
$
|
(278.0
|
)
|
Canada
|
248.6
|
|
271.3
|
|
(22.7
|
)
|
—
|
|
(2.7
|
)
|
(20.0
|
)
|
||||||
Other countries
|
177.7
|
|
184.7
|
|
(7.0
|
)
|
—
|
|
(7.8
|
)
|
0.8
|
|
||||||
Total
|
$
|
3,245.7
|
|
$
|
3,472.7
|
|
$
|
(227.0
|
)
|
$
|
80.7
|
|
$
|
(10.5
|
)
|
$
|
(297.2
|
)
|
Amounts in millions
|
|
|
|
Amount of change due to
|
||||||||||||||
|
Year ended June 30,
|
SD&A Decrease
|
|
Acquisitions
|
|
Foreign Currency
|
|
Organic Change
|
|
|||||||||
|
2020
|
|
2019
|
|
||||||||||||||
SD&A
|
$
|
717.7
|
|
$
|
742.2
|
|
$
|
(24.5
|
)
|
$
|
20.8
|
|
$
|
(2.5
|
)
|
$
|
(42.8
|
)
|
|
Year Ended June 30,
|
||||||
|
2020
|
|
|
2019
|
|
||
Net Cash Provided by (Used in):
|
|
|
|
||||
Operating Activities
|
$
|
296,714
|
|
|
$
|
180,601
|
|
Investing Activities
|
(55,404
|
)
|
|
(55,102
|
)
|
||
Financing Activities
|
(78,238
|
)
|
|
(71,539
|
)
|
||
Exchange Rate Effect
|
(2,740
|
)
|
|
109
|
|
||
Increase in Cash and Cash Equivalents
|
$
|
160,332
|
|
|
$
|
54,069
|
|
Decrease in accounts receivable
|
$
|
65,972
|
|
Decrease in inventory
|
$
|
73,618
|
|
Decrease in accounts payable
|
$
|
(24,068
|
)
|
June 30,
|
2020
|
|
|
2019
|
|
||
Unsecured credit facility
|
$
|
589,250
|
|
|
$
|
613,625
|
|
Trade receivable securitization facility
|
175,000
|
|
|
175,000
|
|
||
Series C notes
|
120,000
|
|
|
120,000
|
|
||
Series D Notes
|
25,000
|
|
|
50,000
|
|
||
Series E Notes
|
25,000
|
|
|
—
|
|
||
Other
|
1,026
|
|
|
1,204
|
|
||
Total debt
|
$
|
935,276
|
|
|
$
|
959,829
|
|
Less: unamortized debt issuance costs
|
1,487
|
|
|
1,943
|
|
||
|
$
|
933,789
|
|
|
$
|
957,886
|
|
June 30,
|
2020
|
|
|
2019
|
|
||
Accounts receivable, gross
|
$
|
463,659
|
|
|
$
|
551,400
|
|
Allowance for doubtful accounts
|
13,661
|
|
|
10,498
|
|
||
Accounts receivable, net
|
$
|
449,998
|
|
|
$
|
540,902
|
|
Allowance for doubtful accounts, % of gross receivables
|
2.9
|
%
|
|
1.9
|
%
|
||
|
|
|
|
||||
Year Ended June 30,
|
2020
|
|
|
2019
|
|
||
Provision for losses on accounts receivable
|
$
|
14,055
|
|
|
$
|
4,058
|
|
Provision as a % of net sales
|
0.43
|
%
|
|
0.12
|
%
|
|
Total
|
|
|
Period Less
Than 1 yr
|
|
|
Period
2-3 yrs
|
|
|
Period
4-5 yrs
|
|
|
Period
Over 5 yrs
|
|
|
Other
|
|
||||||
Operating leases
|
$
|
104,165
|
|
|
$
|
29,979
|
|
|
$
|
39,328
|
|
|
$
|
19,540
|
|
|
$
|
15,318
|
|
|
—
|
|
|
Planned funding of post-retirement obligations
|
10,000
|
|
|
900
|
|
|
1,800
|
|
|
500
|
|
|
6,800
|
|
|
—
|
|
||||||
Unrecognized income tax benefit liabilities, including interest and penalties
|
6,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,000
|
|
||||||
Long-term debt obligations
|
935,276
|
|
|
79,181
|
|
|
805,744
|
|
|
50,351
|
|
|
—
|
|
|
—
|
|
||||||
Interest on long-term debt obligations (1)
|
40,100
|
|
|
17,000
|
|
|
21,900
|
|
|
1,200
|
|
|
—
|
|
|
—
|
|
||||||
Acquisition holdback payments
|
4,086
|
|
|
2,563
|
|
|
1,448
|
|
|
75
|
|
|
—
|
|
|
—
|
|
||||||
Total Contractual Cash Obligations
|
$
|
1,099,627
|
|
|
$
|
129,623
|
|
|
$
|
870,220
|
|
|
$
|
71,666
|
|
|
$
|
22,118
|
|
|
$
|
6,000
|
|
•
|
We tested the effectiveness of controls over management’s goodwill impairment evaluation, such as controls related to management’s forecasts and the selection of the discount rate and market multiples used.
|
•
|
We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
|
•
|
We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) internal communications to management and the Board of Directors, and (3) forecasted information included in industry reports for the various industries the reporting units operate within.
|
•
|
With the assistance of our fair value specialists, we evaluated the discount rate, including testing the underlying source information and the mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management.
|
•
|
With the assistance of our fair value specialists, we evaluated the market multiples by evaluating the selected comparable publicly traded companies and the adjustments made for differences in growth prospects and risk profiles between the reporting units and the comparable publicly traded companies. We tested the underlying source information and mathematical accuracy of the calculations.
|
•
|
With the assistance of our fair value specialists, we evaluated the fair value of the reporting units based upon reconciling the fair values of the reporting units to the market capitalization of the Company.
|
Year Ended June 30,
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Net sales
|
|
$
|
3,245,652
|
|
|
$
|
3,472,739
|
|
|
$
|
3,073,274
|
|
Cost of sales
|
|
2,307,916
|
|
|
2,465,116
|
|
|
2,189,279
|
|
|||
Gross profit
|
|
937,736
|
|
|
1,007,623
|
|
|
883,995
|
|
|||
Selling, distribution and administrative expense, including depreciation
|
|
717,747
|
|
|
742,241
|
|
|
658,168
|
|
|||
Goodwill and intangible impairment
|
|
131,000
|
|
|
31,594
|
|
|
—
|
|
|||
Operating income
|
|
88,989
|
|
|
233,788
|
|
|
225,827
|
|
|||
Interest expense
|
|
37,264
|
|
|
40,788
|
|
|
24,142
|
|
|||
Interest income
|
|
(729
|
)
|
|
(600
|
)
|
|
(657
|
)
|
|||
Other income, net
|
|
(2,782
|
)
|
|
(881
|
)
|
|
(2,376
|
)
|
|||
Income before income taxes
|
|
55,236
|
|
|
194,481
|
|
|
204,718
|
|
|||
Income tax expense
|
|
31,194
|
|
|
50,488
|
|
|
63,093
|
|
|||
Net income
|
|
$
|
24,042
|
|
|
$
|
143,993
|
|
|
$
|
141,625
|
|
Net income per share — basic
|
|
$
|
0.62
|
|
|
$
|
3.72
|
|
|
$
|
3.65
|
|
Net income per share — diluted
|
|
$
|
0.62
|
|
|
$
|
3.68
|
|
|
$
|
3.61
|
|
Year Ended June 30,
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Net income per the statements of consolidated income
|
|
$
|
24,042
|
|
|
$
|
143,993
|
|
|
$
|
141,625
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) income, before tax:
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
|
(18,499
|
)
|
|
2,021
|
|
|
(8,875
|
)
|
|||
Post-employment benefits:
|
|
|
|
|
|
|
||||||
Actuarial (loss) gain on re-measurement
|
|
(2,192
|
)
|
|
(372
|
)
|
|
709
|
|
|||
Reclassification of actuarial (gains) losses and prior service cost into other income, net and included in net periodic pension costs
|
|
(66
|
)
|
|
(306
|
)
|
|
(73
|
)
|
|||
Unrealized gain on investment securities available for sale
|
|
—
|
|
|
—
|
|
|
37
|
|
|||
Cumulative effect of adopting accounting standard
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|||
Unrealized loss on cash flow hedge
|
|
(16,615
|
)
|
|
(14,446
|
)
|
|
—
|
|
|||
Reclassification of interest from cash flow hedge into interest expense
|
|
4,638
|
|
|
244
|
|
|
—
|
|
|||
Total other comprehensive loss, before tax
|
|
(32,734
|
)
|
|
(12,909
|
)
|
|
(8,202
|
)
|
|||
Income tax (benefit) expense related to items of other comprehensive loss
|
|
(3,190
|
)
|
|
(3,246
|
)
|
|
319
|
|
|||
Other comprehensive loss, net of tax
|
|
(29,544
|
)
|
|
(9,663
|
)
|
|
(8,521
|
)
|
|||
Comprehensive (loss) income
|
|
$
|
(5,502
|
)
|
|
$
|
134,330
|
|
|
$
|
133,104
|
|
June 30,
|
|
2020
|
|
|
2019
|
|
||
Assets
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
268,551
|
|
|
$
|
108,219
|
|
Accounts receivable, net
|
|
449,998
|
|
|
540,902
|
|
||
Inventories
|
|
389,150
|
|
|
447,555
|
|
||
Other current assets
|
|
52,070
|
|
|
51,462
|
|
||
Total current assets
|
|
1,159,769
|
|
|
1,148,138
|
|
||
Property — at cost
|
|
|
|
|
||||
Land
|
|
14,339
|
|
|
14,452
|
|
||
Buildings
|
|
104,396
|
|
|
101,338
|
|
||
Equipment, including computers and software
|
|
195,220
|
|
|
189,579
|
|
||
Total property — at cost
|
|
313,955
|
|
|
305,369
|
|
||
Less accumulated depreciation
|
|
192,054
|
|
|
181,066
|
|
||
Property — net
|
|
121,901
|
|
|
124,303
|
|
||
Operating lease assets, net
|
|
90,636
|
|
|
—
|
|
||
Identifiable intangibles, net
|
|
343,215
|
|
|
368,866
|
|
||
Goodwill
|
|
540,594
|
|
|
661,991
|
|
||
Other assets
|
|
27,436
|
|
|
28,399
|
|
||
Total Assets
|
|
$
|
2,283,551
|
|
|
$
|
2,331,697
|
|
Liabilities
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
186,270
|
|
|
$
|
237,289
|
|
Current portion of long-term debt
|
|
78,646
|
|
|
49,036
|
|
||
Compensation and related benefits
|
|
61,887
|
|
|
67,978
|
|
||
Other current liabilities
|
|
99,280
|
|
|
69,491
|
|
||
Total current liabilities
|
|
426,083
|
|
|
423,794
|
|
||
Long-term debt
|
|
855,143
|
|
|
908,850
|
|
||
Other liabilities
|
|
158,783
|
|
|
102,019
|
|
||
Total Liabilities
|
|
1,440,009
|
|
|
1,434,663
|
|
||
Shareholders’ Equity
|
|
|
|
|
||||
Preferred stock — no par value; 2,500 shares authorized; none issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock — no par value; 80,000 shares authorized; 54,213 shares issued;
38,710 and 38,597 shares outstanding, respectively
|
|
10,000
|
|
|
10,000
|
|
||
Additional paid-in capital
|
|
176,492
|
|
|
172,931
|
|
||
Retained earnings
|
|
1,200,570
|
|
|
1,229,148
|
|
||
Treasury shares — at cost (15,503 and 15,616 shares), respectively
|
|
(414,090
|
)
|
|
(415,159
|
)
|
||
Accumulated other comprehensive loss
|
|
(129,430
|
)
|
|
(99,886
|
)
|
||
Total Shareholders’ Equity
|
|
843,542
|
|
|
897,034
|
|
||
Total Liabilities and Shareholders’ Equity
|
|
$
|
2,283,551
|
|
|
$
|
2,331,697
|
|
Year Ended June 30,
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Cash Flows from Operating Activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
24,042
|
|
|
$
|
143,993
|
|
|
$
|
141,625
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Goodwill & Intangible impairment
|
|
131,000
|
|
|
31,594
|
|
|
—
|
|
|||
Depreciation and amortization of property
|
|
21,196
|
|
|
20,236
|
|
|
17,798
|
|
|||
Amortization of intangibles
|
|
41,553
|
|
|
41,883
|
|
|
32,065
|
|
|||
Amortization of stock appreciation rights and options
|
|
2,954
|
|
|
2,437
|
|
|
1,961
|
|
|||
Deferred income taxes
|
|
(13,292
|
)
|
|
2,368
|
|
|
1,615
|
|
|||
Provision for losses on accounts receivable
|
|
14,055
|
|
|
4,058
|
|
|
2,803
|
|
|||
Unrealized foreign exchange transaction (gains) losses
|
|
(1,357
|
)
|
|
238
|
|
|
(667
|
)
|
|||
Other share-based compensation expense
|
|
4,000
|
|
|
4,474
|
|
|
4,666
|
|
|||
Gain on sale of property
|
|
(1,157
|
)
|
|
(459
|
)
|
|
(335
|
)
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
74,437
|
|
|
8,465
|
|
|
(83,103
|
)
|
|||
Inventories
|
|
57,028
|
|
|
(16,590
|
)
|
|
(33,436
|
)
|
|||
Other operating assets
|
|
(5,268
|
)
|
|
(7,738
|
)
|
|
6,947
|
|
|||
Accounts payable
|
|
(53,856
|
)
|
|
(29,788
|
)
|
|
50,345
|
|
|||
Other operating liabilities
|
|
1,379
|
|
|
(24,570
|
)
|
|
5,020
|
|
|||
Cash provided by Operating Activities
|
|
296,714
|
|
|
180,601
|
|
|
147,304
|
|
|||
Cash Flows from Investing Activities
|
|
|
|
|
|
|
||||||
Capital expenditures
|
|
(20,115
|
)
|
|
(18,970
|
)
|
|
(23,230
|
)
|
|||
Proceeds from property sales
|
|
1,948
|
|
|
1,003
|
|
|
978
|
|
|||
Cash paid for acquisition of businesses, net of cash acquired
|
|
(37,237
|
)
|
|
(37,526
|
)
|
|
(775,654
|
)
|
|||
Other
|
|
—
|
|
|
391
|
|
|
—
|
|
|||
Cash used in Investing Activities
|
|
(55,404
|
)
|
|
(55,102
|
)
|
|
(797,906
|
)
|
|||
Cash Flows from Financing Activities
|
|
|
|
|
|
|
||||||
Net (repayments) borrowings under revolving credit facility
|
|
—
|
|
|
(19,500
|
)
|
|
19,500
|
|
|||
Borrowings under long-term debt facilities
|
|
25,000
|
|
|
175,000
|
|
|
780,000
|
|
|||
Long-term debt repayments
|
|
(49,553
|
)
|
|
(161,738
|
)
|
|
(125,420
|
)
|
|||
Payment of debt issuance costs
|
|
(95
|
)
|
|
(775
|
)
|
|
(3,298
|
)
|
|||
Purchases of treasury shares
|
|
—
|
|
|
(11,158
|
)
|
|
(22,778
|
)
|
|||
Dividends paid
|
|
(48,873
|
)
|
|
(47,266
|
)
|
|
(45,858
|
)
|
|||
Acquisition holdback payments
|
|
(2,440
|
)
|
|
(2,610
|
)
|
|
(319
|
)
|
|||
Exercise of stock appreciation rights and options
|
|
330
|
|
|
—
|
|
|
102
|
|
|||
Taxes paid for shares withheld
|
|
(2,607
|
)
|
|
(3,492
|
)
|
|
(1,645
|
)
|
|||
Cash (used in) provided by Financing Activities
|
|
(78,238
|
)
|
|
(71,539
|
)
|
|
600,284
|
|
|||
Effect of exchange rate changes on cash
|
|
(2,740
|
)
|
|
109
|
|
|
(589
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
|
160,332
|
|
|
54,069
|
|
|
(50,907
|
)
|
|||
Cash and cash equivalents at beginning of year
|
|
108,219
|
|
|
54,150
|
|
|
105,057
|
|
|||
Cash and Cash Equivalents at End of Year
|
|
$
|
268,551
|
|
|
$
|
108,219
|
|
|
$
|
54,150
|
|
|
|
|
|
|
|
|
||||||
Supplemental Cash Flow Information
|
|
|
|
|
|
|
||||||
Cash paid during the year for:
|
|
|
|
|
|
|
||||||
Income taxes
|
|
41,162
|
|
|
54,294
|
|
|
41,724
|
|
|||
Interest
|
|
36,648
|
|
|
40,142
|
|
|
25,560
|
|
For the Years Ended June 30, 2020, 2019 and 2018
|
|
Shares of
Common
Stock
Outstanding
|
|
|
Common
Stock
|
|
|
Additional
Paid-In
Capital
|
|
|
Retained
Earnings
|
|
|
Treasury
Shares-
at Cost
|
|
|
Accumulated
Other
Comprehensive
Loss
|
|
|
Total
Shareholders'
Equity
|
|
||||||
Balance at June 30, 2017
|
|
39,041
|
|
|
$
|
10,000
|
|
|
$
|
164,655
|
|
|
$
|
1,033,751
|
|
|
$
|
(381,448
|
)
|
|
$
|
(81,702
|
)
|
|
$
|
745,256
|
|
Net income
|
|
|
|
|
|
|
|
141,625
|
|
|
|
|
|
|
141,625
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
(8,050
|
)
|
|
(8,050
|
)
|
|||||||||||
Reclassifications of certain income tax effects from accumulated other comprehensive loss
|
|
|
|
|
|
|
|
471
|
|
|
|
|
(471
|
)
|
|
—
|
|
||||||||||
Cash dividends — $1.18 per share
|
|
|
|
|
|
|
|
(46,162
|
)
|
|
|
|
|
|
(46,162
|
)
|
|||||||||||
Purchases of common stock for treasury
|
|
(393
|
)
|
|
|
|
|
|
|
|
(22,778
|
)
|
|
|
|
(22,778
|
)
|
||||||||||
Treasury shares issued for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Exercise of stock appreciation rights and options
|
|
19
|
|
|
|
|
(482
|
)
|
|
|
|
84
|
|
|
|
|
(398
|
)
|
|||||||||
Performance share awards
|
|
5
|
|
|
|
|
(273
|
)
|
|
|
|
(24
|
)
|
|
|
|
(297
|
)
|
|||||||||
Restricted stock units
|
|
15
|
|
|
|
|
(740
|
)
|
|
|
|
(56
|
)
|
|
|
|
(796
|
)
|
|||||||||
Compensation expense — stock appreciation rights and options
|
|
|
|
|
|
1,961
|
|
|
|
|
|
|
|
|
1,961
|
|
|||||||||||
Other share-based compensation expense
|
|
|
|
|
|
4,666
|
|
|
|
|
|
|
|
|
4,666
|
|
|||||||||||
Other
|
|
16
|
|
|
|
|
(404
|
)
|
|
(7
|
)
|
|
347
|
|
|
|
|
(64
|
)
|
||||||||
Balance at June 30, 2018
|
|
38,703
|
|
|
10,000
|
|
|
169,383
|
|
|
1,129,678
|
|
|
(403,875
|
)
|
|
(90,223
|
)
|
|
814,963
|
|
||||||
Net income
|
|
|
|
|
|
|
|
143,993
|
|
|
|
|
|
|
143,993
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
(9,663
|
)
|
|
(9,663
|
)
|
|||||||||||
Cumulative effect of adopting accounting standards
|
|
|
|
|
|
|
|
3,056
|
|
|
|
|
|
|
3,056
|
|
|||||||||||
Cash dividends — $1.22 per share
|
|
|
|
|
|
|
|
(47,621
|
)
|
|
|
|
|
|
(47,621
|
)
|
|||||||||||
Purchases of common stock for treasury
|
|
(192
|
)
|
|
|
|
|
|
|
|
(11,158
|
)
|
|
|
|
(11,158
|
)
|
||||||||||
Treasury shares issued for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Exercise of stock appreciation rights and options
|
|
30
|
|
|
|
|
(1,069
|
)
|
|
|
|
(59
|
)
|
|
|
|
(1,128
|
)
|
|||||||||
Performance share awards
|
|
18
|
|
|
|
|
(844
|
)
|
|
|
|
(301
|
)
|
|
|
|
(1,145
|
)
|
|||||||||
Restricted stock units
|
|
23
|
|
|
|
|
(1,057
|
)
|
|
|
|
(120
|
)
|
|
|
|
(1,177
|
)
|
|||||||||
Compensation expense — stock appreciation rights and options
|
|
|
|
|
|
2,437
|
|
|
|
|
|
|
|
|
2,437
|
|
|||||||||||
Other share-based compensation expense
|
|
|
|
|
|
4,474
|
|
|
|
|
|
|
|
|
4,474
|
|
|||||||||||
Other
|
|
15
|
|
|
|
|
(393
|
)
|
|
42
|
|
|
354
|
|
|
|
|
3
|
|
||||||||
Balance at June 30, 2019
|
|
38,597
|
|
|
10,000
|
|
|
172,931
|
|
|
1,229,148
|
|
|
(415,159
|
)
|
|
(99,886
|
)
|
|
897,034
|
|
||||||
Net income
|
|
|
|
|
|
|
|
24,042
|
|
|
|
|
|
|
24,042
|
|
|||||||||||
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
(29,544
|
)
|
|
(29,544
|
)
|
|||||||||||
Cumulative effect of adopting accounting standards
|
|
|
|
|
|
|
|
(3,275
|
)
|
|
|
|
|
|
(3,275
|
)
|
|||||||||||
Cash dividends — $1.26 per share
|
|
|
|
|
|
|
|
(49,305
|
)
|
|
|
|
|
|
(49,305
|
)
|
|||||||||||
Treasury shares issued for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Exercise of stock appreciation rights and options
|
|
43
|
|
|
|
|
(730
|
)
|
|
|
|
71
|
|
|
|
|
(659
|
)
|
|||||||||
Performance share awards
|
|
36
|
|
|
|
|
(1,540
|
)
|
|
|
|
362
|
|
|
|
|
(1,178
|
)
|
|||||||||
Restricted stock units
|
|
17
|
|
|
|
|
(671
|
)
|
|
|
|
213
|
|
|
|
|
(458
|
)
|
|||||||||
Compensation expense — stock appreciation rights and options
|
|
|
|
|
|
2,954
|
|
|
|
|
|
|
|
|
2,954
|
|
|||||||||||
Other share-based compensation expense
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
4,000
|
|
|||||||||||
Other
|
|
17
|
|
|
|
|
(452
|
)
|
|
(40
|
)
|
|
423
|
|
|
|
|
(69
|
)
|
||||||||
Balance at June 30, 2020
|
|
38,710
|
|
|
$
|
10,000
|
|
|
$
|
176,492
|
|
|
$
|
1,200,570
|
|
|
$
|
(414,090
|
)
|
|
$
|
(129,430
|
)
|
|
$
|
843,542
|
|
|
Year Ended June 30, 2020
|
||||||||
|
Service Center Based Distribution
|
|
Fluid Power & Flow Control
|
|
Total
|
|
|||
Geographic Areas:
|
|
|
|
||||||
United States
|
$
|
1,833,275
|
|
$
|
986,125
|
|
$
|
2,819,400
|
|
Canada
|
248,610
|
|
—
|
|
248,610
|
|
|||
Other countries
|
160,064
|
|
17,578
|
|
177,642
|
|
|||
Total
|
$
|
2,241,949
|
|
$
|
1,003,703
|
|
$
|
3,245,652
|
|
|
Year Ended June 30, 2019
|
||||||||
|
Service Center Based Distribution
|
|
Fluid Power & Flow Control
|
|
Total
|
|
|||
Geographic Areas:
|
|
|
|
||||||
United States
|
$
|
2,009,479
|
|
$
|
1,007,280
|
|
$
|
3,016,759
|
|
Canada
|
271,305
|
|
—
|
|
271,305
|
|
|||
Other countries
|
172,121
|
|
12,554
|
|
184,675
|
|
|||
Total
|
$
|
2,452,905
|
|
$
|
1,019,834
|
|
$
|
3,472,739
|
|
|
Year Ended June 30, 2018
|
||||||||
|
Service Center Based Distribution
|
|
Fluid Power & Flow Control
|
|
Total
|
|
|||
Geographic Areas:
|
|
|
|
||||||
United States
|
$
|
1,903,388
|
|
$
|
711,653
|
|
$
|
2,615,041
|
|
Canada
|
273,622
|
|
—
|
|
273,622
|
|
|||
Other countries
|
169,408
|
|
15,203
|
|
184,611
|
|
|||
Total
|
$
|
2,346,418
|
|
$
|
726,856
|
|
$
|
3,073,274
|
|
|
Year Ended June 30, 2020
|
|||||||
|
Service Center Based Distribution
|
|
|
Fluid Power & Flow Control
|
|
|
Total
|
|
General Industry
|
35.0
|
%
|
|
41.2
|
%
|
|
36.8
|
%
|
Industrial Machinery
|
9.7
|
%
|
|
24.4
|
%
|
|
14.3
|
%
|
Metals
|
11.1
|
%
|
|
7.2
|
%
|
|
9.9
|
%
|
Food
|
12.2
|
%
|
|
3.1
|
%
|
|
9.4
|
%
|
Forest Products
|
9.3
|
%
|
|
3.7
|
%
|
|
7.6
|
%
|
Chem/Petrochem
|
3.3
|
%
|
|
13.4
|
%
|
|
6.4
|
%
|
Oil & Gas
|
7.5
|
%
|
|
1.6
|
%
|
|
5.7
|
%
|
Cement & Aggregate
|
7.3
|
%
|
|
1.0
|
%
|
|
5.4
|
%
|
Transportation
|
4.6
|
%
|
|
4.4
|
%
|
|
4.5
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Year Ended June 30, 2019
|
|||||||
|
Service Center Based Distribution
|
|
|
Fluid Power & Flow Control
|
|
|
Total
|
|
General Industry
|
33.7
|
%
|
|
43.0
|
%
|
|
36.3
|
%
|
Industrial Machinery
|
10.4
|
%
|
|
21.8
|
%
|
|
13.8
|
%
|
Metals
|
12.6
|
%
|
|
9.4
|
%
|
|
11.6
|
%
|
Food
|
10.6
|
%
|
|
2.7
|
%
|
|
8.3
|
%
|
Forest Products
|
8.0
|
%
|
|
3.1
|
%
|
|
6.6
|
%
|
Chem/Petrochem
|
3.1
|
%
|
|
13.8
|
%
|
|
6.3
|
%
|
Oil & Gas
|
10.1
|
%
|
|
2.1
|
%
|
|
7.8
|
%
|
Cement & Aggregate
|
6.7
|
%
|
|
1.0
|
%
|
|
5.0
|
%
|
Transportation
|
4.8
|
%
|
|
3.1
|
%
|
|
4.3
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Year Ended June 30, 2020
|
|||||||
|
Service Center Based Distribution
|
|
|
Fluid Power & Flow Control
|
|
|
Total
|
|
Power Transmission
|
35.4
|
%
|
|
9.5
|
%
|
|
27.4
|
%
|
Fluid Power
|
13.4
|
%
|
|
39.0
|
%
|
|
21.3
|
%
|
General Maintenance; Hose Products
|
24.6
|
%
|
|
11.7
|
%
|
|
20.6
|
%
|
Bearings, Linear & Seals
|
26.6
|
%
|
|
0.3
|
%
|
|
18.5
|
%
|
Specialty Flow Control
|
—
|
%
|
|
39.5
|
%
|
|
12.2
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
Year Ended June 30, 2019
|
|||||||
|
Service Center Based Distribution
|
|
|
Fluid Power & Flow Control
|
|
|
Total
|
|
Power Transmission
|
33.9
|
%
|
|
1.6
|
%
|
|
24.4
|
%
|
Fluid Power
|
13.5
|
%
|
|
39.4
|
%
|
|
21.1
|
%
|
General Maintenance; Hose Products
|
25.1
|
%
|
|
5.3
|
%
|
|
19.3
|
%
|
Bearings, Linear & Seals
|
27.5
|
%
|
|
0.3
|
%
|
|
19.5
|
%
|
Specialty Flow Control
|
—
|
%
|
|
53.4
|
%
|
|
15.7
|
%
|
Total
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
June 30, 2020
|
|
June 30, 2019
|
|
$ Change
|
|
% Change
|
|
|||
Contract assets
|
$
|
8,435
|
|
$
|
8,920
|
|
$
|
(485
|
)
|
(5.4
|
)%
|
|
FCX Acquisition
|
|
|
|
2018
|
|
|
Cash
|
$
|
11,141
|
|
Accounts receivable
|
80,836
|
|
|
Inventories
|
44,669
|
|
|
Other current assets
|
1,753
|
|
|
Property
|
8,282
|
|
|
Identifiable intangible assets
|
305,420
|
|
|
Goodwill
|
440,012
|
|
|
Other assets
|
775
|
|
|
Total assets acquired
|
$
|
892,888
|
|
Accounts payable and accrued liabilities
|
54,035
|
|
|
Other liabilities
|
2,677
|
|
|
Deferred tax liabilities
|
54,395
|
|
|
Net assets acquired
|
$
|
781,781
|
|
|
|
||
Purchase price
|
$
|
784,281
|
|
Reconciliation of fair value transferred:
|
|
||
Working Capital Adjustments
|
(2,500
|
)
|
|
Total Consideration
|
$
|
781,781
|
|
Balance at 1/31/2018
|
$
|
440,012
|
|
Impairment
|
131,000
|
|
|
Balance at 6/30/2020
|
$
|
309,012
|
|
|
2020 (1)
|
|
2019
|
|
January 31, 2018 to June 30, 2018
|
|
|||
Net sales
|
$
|
490,743
|
|
$
|
549,833
|
|
$
|
249,752
|
|
Operating income
|
(97,300
|
)
|
38,186
|
|
16,845
|
|
|||
Net income
|
(91,739
|
)
|
28,075
|
|
8,758
|
|
(1)
|
There was a $131,000 goodwill impairment charge during the year ended June 30, 2020. See note 5, Goodwill and Intangibles, for further information.
|
June 30,
|
|
2020
|
|
|
2019
|
|
||
U.S. inventories at average cost
|
|
$
|
431,866
|
|
|
$
|
473,949
|
|
Foreign inventories at average cost
|
|
112,795
|
|
|
125,260
|
|
||
|
|
544,661
|
|
|
599,209
|
|
||
Less: Excess of average cost over LIFO cost for U.S. inventories
|
|
155,511
|
|
|
151,654
|
|
||
Inventories on consolidated balance sheets
|
|
$
|
389,150
|
|
|
$
|
447,555
|
|
|
Service Center Based Distribution
|
|
|
Fluid Power & Flow Control
|
|
|
Total
|
|
|||
Balance at July 1, 2018
|
$
|
203,084
|
|
|
$
|
443,559
|
|
|
$
|
646,643
|
|
Goodwill acquired during the year
|
9,943
|
|
|
4,798
|
|
|
14,741
|
|
|||
Other, primarily currency translation
|
607
|
|
|
—
|
|
|
607
|
|
|||
Balance at June 30, 2019
|
213,634
|
|
|
448,357
|
|
|
661,991
|
|
|||
Goodwill adjusted/acquired during the year
|
(3,393
|
)
|
|
14,667
|
|
|
11,274
|
|
|||
Impairment
|
—
|
|
|
(131,000
|
)
|
|
(131,000
|
)
|
|||
Other, primarily currency translation
|
(1,671
|
)
|
|
—
|
|
|
(1,671
|
)
|
|||
Balance at June 30, 2020
|
$
|
208,570
|
|
|
$
|
332,024
|
|
|
$
|
540,594
|
|
June 30, 2020
|
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Book Value
|
|
|||
Finite-Lived Intangibles:
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
426,017
|
|
|
$
|
162,965
|
|
|
$
|
263,052
|
|
Trade names
|
111,453
|
|
|
34,815
|
|
|
76,638
|
|
|||
Vendor relationships
|
11,329
|
|
|
8,934
|
|
|
2,395
|
|
|||
Other
|
2,078
|
|
|
948
|
|
|
1,130
|
|
|||
Total Intangibles
|
$
|
550,877
|
|
|
$
|
207,662
|
|
|
$
|
343,215
|
|
June 30, 2019
|
Amount
|
|
|
Accumulated
Amortization
|
|
|
Net
Book Value
|
|
|||
Finite-Lived Intangibles:
|
|
|
|
|
|
||||||
Customer relationships
|
$
|
422,367
|
|
|
$
|
135,879
|
|
|
$
|
286,488
|
|
Trade names
|
105,946
|
|
|
27,232
|
|
|
78,714
|
|
|||
Vendor relationships
|
11,367
|
|
|
8,156
|
|
|
3,211
|
|
|||
Other
|
2,702
|
|
|
2,249
|
|
|
453
|
|
|||
Total Intangibles
|
$
|
542,382
|
|
|
$
|
173,516
|
|
|
$
|
368,866
|
|
|
Acquisition Cost Allocation
|
|
|
Weighted-Average Life
|
|
Customer relationships
|
$
|
7,160
|
|
|
20.0
|
Trade names
|
4,260
|
|
|
15.0
|
|
Other
|
980
|
|
|
6.8
|
|
Total Intangibles Acquired
|
$
|
12,400
|
|
|
17.2
|
June 30,
|
2020
|
|
|
2019
|
|
||
Unsecured credit facility
|
$
|
589,250
|
|
|
$
|
613,625
|
|
Trade receivable securitization facility
|
175,000
|
|
|
175,000
|
|
||
Series C Notes
|
120,000
|
|
|
120,000
|
|
||
Series D Notes
|
25,000
|
|
|
50,000
|
|
||
Series E Notes
|
25,000
|
|
|
—
|
|
||
Other
|
1,026
|
|
|
1,204
|
|
||
Total debt
|
$
|
935,276
|
|
|
$
|
959,829
|
|
Less: unamortized debt issuance costs
|
1,487
|
|
|
1,943
|
|
||
|
$
|
933,789
|
|
|
$
|
957,886
|
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
U.S.
|
$
|
36,161
|
|
|
$
|
204,462
|
|
|
$
|
186,874
|
|
Foreign
|
19,075
|
|
|
(9,981
|
)
|
|
17,844
|
|
|||
Income before income taxes
|
$
|
55,236
|
|
|
$
|
194,481
|
|
|
$
|
204,718
|
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
31,149
|
|
|
$
|
34,437
|
|
|
$
|
48,131
|
|
State and local
|
7,580
|
|
|
7,965
|
|
|
8,038
|
|
|||
Foreign
|
5,757
|
|
|
5,718
|
|
|
5,309
|
|
|||
Total current
|
44,486
|
|
|
48,120
|
|
|
61,478
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
(8,594
|
)
|
|
6,265
|
|
|
5,955
|
|
|||
State and local
|
(3,098
|
)
|
|
1,947
|
|
|
(586
|
)
|
|||
Foreign
|
(1,600
|
)
|
|
(5,844
|
)
|
|
(3,754
|
)
|
|||
Total deferred
|
(13,292
|
)
|
|
2,368
|
|
|
1,615
|
|
|||
Total
|
$
|
31,194
|
|
|
$
|
50,488
|
|
|
$
|
63,093
|
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
Statutory income tax rate
|
21.0
|
%
|
|
21.0
|
%
|
|
28.1
|
%
|
Effects of:
|
|
|
|
|
|
|||
State and local taxes
|
6.4
|
|
|
4.4
|
|
|
3.1
|
|
U.S. federal tax reform
|
—
|
|
|
(0.3
|
)
|
|
3.1
|
|
CARES Act NOL carryback
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
Goodwill impairment
|
31.4
|
|
|
—
|
|
|
—
|
|
Stock compensation
|
(1.3
|
)
|
|
(0.5
|
)
|
|
(0.4
|
)
|
GILTI/FDII
|
3.6
|
|
|
0.7
|
|
|
—
|
|
R & D credit
|
(1.2
|
)
|
|
(0.4
|
)
|
|
(0.3
|
)
|
U.S. tax on foreign income, net
|
(3.1
|
)
|
|
0.5
|
|
|
—
|
|
Impact of foreign operations
|
1.6
|
|
|
(0.6
|
)
|
|
0.7
|
|
Non-deductibles
|
1.2
|
|
|
0.6
|
|
|
0.3
|
|
Interest deduction
|
(4.0
|
)
|
|
(1.2
|
)
|
|
(1.6
|
)
|
Deductible dividend
|
(0.6
|
)
|
|
(0.2
|
)
|
|
(1.3
|
)
|
Valuation allowance
|
2.6
|
|
|
2.9
|
|
|
(0.3
|
)
|
Other, net
|
0.7
|
|
|
(0.9
|
)
|
|
(0.6
|
)
|
Effective income tax rate
|
56.5
|
%
|
|
26.0
|
%
|
|
30.8
|
%
|
June 30,
|
2020
|
|
|
2019
|
|
||
Deferred tax assets:
|
|
|
|
||||
Compensation liabilities not currently deductible
|
$
|
17,252
|
|
|
$
|
17,401
|
|
Other expenses and reserves not currently deductible
|
15,272
|
|
|
13,050
|
|
||
Goodwill and intangibles
|
—
|
|
|
2,398
|
|
||
Leases
|
24,016
|
|
|
—
|
|
||
Net operating loss carryforwards
|
8,859
|
|
|
8,466
|
|
||
Hedging instrument
|
6,406
|
|
|
3,498
|
|
||
Other
|
757
|
|
|
1,173
|
|
||
Total deferred tax assets
|
72,562
|
|
|
45,986
|
|
||
Less: Valuation allowance
|
(7,494
|
)
|
|
(5,597
|
)
|
||
Deferred tax assets, net of valuation allowance
|
65,068
|
|
|
40,389
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Inventories
|
(8,284
|
)
|
|
(8,600
|
)
|
||
Goodwill and intangibles
|
(58,506
|
)
|
|
(75,504
|
)
|
||
Leases
|
(23,407
|
)
|
|
—
|
|
||
Depreciation and differences in property bases
|
(13,018
|
)
|
|
(10,777
|
)
|
||
Total deferred tax liabilities
|
(103,215
|
)
|
|
(94,881
|
)
|
||
Net deferred tax liabilities
|
$
|
(38,147
|
)
|
|
$
|
(54,492
|
)
|
Net deferred tax liabilities are classified as follows:
|
|
|
|
||||
Other assets
|
$
|
4,749
|
|
|
$
|
3,859
|
|
Other liabilities
|
(42,896
|
)
|
|
(58,351
|
)
|
||
Net deferred tax liabilities
|
$
|
(38,147
|
)
|
|
$
|
(54,492
|
)
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
||
Unrecognized Income Tax Benefits at beginning of the year
|
$
|
4,979
|
|
|
$
|
3,988
|
|
Current year tax positions
|
105
|
|
|
105
|
|
||
Prior year tax positions
|
177
|
|
|
1,151
|
|
||
Expirations of statutes of limitations
|
(306
|
)
|
|
(265
|
)
|
||
Unrecognized Income Tax Benefits at end of year
|
$
|
4,955
|
|
|
$
|
4,979
|
|
|
Foreign currency translation adjustment
|
|
|
Unrealized gain (loss) on securities available for sale
|
|
|
Post-employment benefits
|
|
|
Cash flow hedge
|
|
|
Total accumulated other comprehensive loss
|
|
|||||
Balance at July 1, 2017
|
$
|
(79,447
|
)
|
|
$
|
21
|
|
|
$
|
(2,276
|
)
|
|
$
|
—
|
|
|
$
|
(81,702
|
)
|
Other comprehensive (loss) income
|
(8,549
|
)
|
|
20
|
|
|
524
|
|
|
—
|
|
|
(8,005
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|
(45
|
)
|
|||||
Amounts reclassified for certain income tax effects to retained earnings
|
22
|
|
|
9
|
|
|
(502
|
)
|
|
—
|
|
|
(471
|
)
|
|||||
Net current-period other comprehensive (loss) income
|
(8,527
|
)
|
|
29
|
|
|
(23
|
)
|
|
—
|
|
|
(8,521
|
)
|
|||||
Balance at June 30, 2018
|
(87,974
|
)
|
|
50
|
|
|
(2,299
|
)
|
|
—
|
|
|
(90,223
|
)
|
|||||
Other comprehensive income (loss)
|
1,644
|
|
|
—
|
|
|
(327
|
)
|
|
(10,887
|
)
|
|
(9,570
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
(226
|
)
|
|
183
|
|
|
(43
|
)
|
|||||
Cumulative effect of adopting accounting standards
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|||||
Net current-period other comprehensive income (loss)
|
1,644
|
|
|
(50
|
)
|
|
(553
|
)
|
|
(10,704
|
)
|
|
(9,663
|
)
|
|||||
Balance at June 30, 2019
|
(86,330
|
)
|
|
—
|
|
|
(2,852
|
)
|
|
(10,704
|
)
|
|
(99,886
|
)
|
|||||
Other comprehensive loss
|
(18,764
|
)
|
|
—
|
|
|
(1,662
|
)
|
|
(12,572
|
)
|
|
(32,998
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
3,504
|
|
|
3,454
|
|
|||||
Net current-period other comprehensive loss
|
(18,764
|
)
|
|
—
|
|
|
(1,712
|
)
|
|
(9,068
|
)
|
|
(29,544
|
)
|
|||||
Balance at June 30, 2020
|
$
|
(105,094
|
)
|
|
$
|
—
|
|
|
$
|
(4,564
|
)
|
|
$
|
(19,772
|
)
|
|
$
|
(129,430
|
)
|
Year Ended June 30,
|
2020
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||||
|
Pre-Tax Amount
|
|
|
Tax Expense (Benefit)
|
|
|
Net Amount
|
|
|
Pre-Tax Amount
|
|
|
Tax Expense (Benefit)
|
|
|
Net Amount
|
|
|
Pre-Tax Amount
|
|
|
Tax (Benefit) Expense
|
|
|
Net Amount
|
|
|||||||||
Foreign currency translation adjustments
|
$
|
(18,499
|
)
|
|
$
|
265
|
|
|
$
|
(18,764
|
)
|
|
$
|
2,021
|
|
|
$
|
377
|
|
|
$
|
1,644
|
|
|
$
|
(8,875
|
)
|
|
$
|
(326
|
)
|
|
$
|
(8,549
|
)
|
Post-employment benefits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Actuarial (loss) gain on re-measurement
|
(2,192
|
)
|
|
(530
|
)
|
|
(1,662
|
)
|
|
(372
|
)
|
|
(45
|
)
|
|
(327
|
)
|
|
709
|
|
|
185
|
|
|
524
|
|
|||||||||
Reclassification of actuarial gains and prior service cost into other income, net and included in net periodic pension costs
|
(66
|
)
|
|
(16
|
)
|
|
(50
|
)
|
|
(306
|
)
|
|
(80
|
)
|
|
(226
|
)
|
|
(73
|
)
|
|
(28
|
)
|
|
(45
|
)
|
|||||||||
Unrealized gain on investment securities available for sale
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
17
|
|
|
20
|
|
|||||||||
Unrealized loss on cash flow hedge
|
(16,615
|
)
|
|
(4,043
|
)
|
|
(12,572
|
)
|
|
(14,446
|
)
|
|
(3,559
|
)
|
|
(10,887
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Reclassification of interest from cash flow hedge into interest expense
|
4,638
|
|
|
1,134
|
|
|
3,504
|
|
|
244
|
|
|
61
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Cumulative effect of adopting accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Reclassification of certain income tax effects to retained earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|
(471
|
)
|
|||||||||
Other comprehensive loss
|
$
|
(32,734
|
)
|
|
$
|
(3,190
|
)
|
|
$
|
(29,544
|
)
|
|
$
|
(12,909
|
)
|
|
$
|
(3,246
|
)
|
|
$
|
(9,663
|
)
|
|
$
|
(8,202
|
)
|
|
$
|
319
|
|
|
$
|
(8,521
|
)
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Net Income
|
$
|
24,042
|
|
|
$
|
143,993
|
|
|
$
|
141,625
|
|
Average Shares Outstanding:
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding for basic computation
|
38,658
|
|
|
38,670
|
|
|
38,752
|
|
|||
Dilutive effect of potential common shares
|
341
|
|
|
490
|
|
|
529
|
|
|||
Weighted-average common shares outstanding for dilutive computation
|
38,999
|
|
|
39,160
|
|
|
39,281
|
|
|||
Net Income Per Share — Basic
|
$
|
0.62
|
|
|
$
|
3.72
|
|
|
$
|
3.65
|
|
Net Income Per Share — Diluted
|
$
|
0.62
|
|
|
$
|
3.68
|
|
|
$
|
3.61
|
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
SARs and options
|
$
|
2,954
|
|
|
$
|
2,440
|
|
|
$
|
1,961
|
|
Performance shares
|
854
|
|
|
2,082
|
|
|
2,006
|
|
|||
Restricted stock and RSUs
|
3,146
|
|
|
2,391
|
|
|
2,660
|
|
|||
Total compensation costs under award programs
|
$
|
6,954
|
|
|
$
|
6,913
|
|
|
$
|
6,627
|
|
June 30,
|
2020
|
|
|
Average Expected Period of Expected Recognition (Years)
|
|
SARs and options
|
$
|
4,113
|
|
|
2.2
|
Performance shares
|
4,580
|
|
|
1.8
|
|
Restricted stock and RSUs
|
3,028
|
|
|
2.1
|
|
Total unrecognized compensation costs under award programs
|
$
|
11,721
|
|
|
2.0
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Expected life, in years
|
6.2
|
|
|
6.0
|
|
|
6.0
|
|
Risk free interest rate
|
1.6
|
%
|
|
2.8
|
%
|
|
2.1
|
%
|
Dividend yield
|
2.3
|
%
|
|
1.8
|
%
|
|
2.5
|
%
|
Volatility
|
23.7
|
%
|
|
22.5
|
%
|
|
24.3
|
%
|
Per share fair value of SARs granted during the year
|
$10.12
|
|
$16.15
|
|
$11.25
|
|
Shares
|
|
|
Weighted-Average
Grant-Date
Fair Value |
|
|
Year Ended June 30, 2020
|
|
|||||
(Shares in thousands)
|
|
|||||
Non-vested, beginning of year
|
97
|
|
|
$
|
50.88
|
|
Awarded
|
17
|
|
|
52.86
|
|
|
Vested
|
(58
|
)
|
|
47.87
|
|
|
Non-vested, end of year
|
56
|
|
|
$
|
54.62
|
|
|
Shares
|
|
|
Weighted-Average
Grant-Date
Fair Value |
|
|
Year Ended June 30, 2020
|
|
|||||
(Share amounts in thousands)
|
|
|||||
Non-vested, beginning of year
|
89
|
|
|
$
|
59.93
|
|
Granted
|
81
|
|
|
56.74
|
|
|
Vested
|
(40
|
)
|
|
53.60
|
|
|
Non-vested, end of year
|
130
|
|
|
$
|
59.91
|
|
June 30,
|
|
2020
|
|
|
Operating lease assets, net
|
|
$
|
90,636
|
|
|
|
|
||
Operating lease liabilities
|
|
|
||
Other current liabilities
|
|
$
|
27,231
|
|
Other liabilities
|
|
67,926
|
|
|
Total operating lease liabilities
|
|
$
|
95,157
|
|
June 30,
|
|
2020
|
|
Weighted average remaining lease term (years)
|
|
3.6
|
|
Weighted average incremental borrowing rate
|
|
3.45
|
%
|
Year Ended June 30,
|
|
2020
|
|
|
Cash paid for operating leases
|
|
$
|
34,642
|
|
Right of use assets obtained in exchange for new operating lease liabilities
|
|
$
|
39,136
|
|
Fiscal Year
|
Maturity of Operating Lease Liabilities
|
|
|
2021
|
$
|
29,979
|
|
2022
|
22,900
|
|
|
2023
|
16,428
|
|
|
2024
|
12,842
|
|
|
2025
|
6,698
|
|
|
Thereafter
|
15,318
|
|
|
Total lease payments
|
104,165
|
|
|
Less interest
|
9,008
|
|
|
Present value of lease liabilities
|
$
|
95,157
|
|
Fiscal Year
|
Operating Leases
|
|
|
2020
|
$
|
33,707
|
|
2021
|
23,407
|
|
|
2022
|
16,420
|
|
|
2023
|
10,653
|
|
|
2024
|
7,838
|
|
|
Thereafter
|
12,135
|
|
|
Total minimum lease payments
|
$
|
104,160
|
|
|
Service Center
Based Distribution
|
|
|
Fluid Power & Flow Control
|
|
|
Total
|
|
|||
Year Ended June 30, 2020
|
|
|
|
|
|
||||||
Net sales
|
$
|
2,241,949
|
|
|
$
|
1,003,703
|
|
|
$
|
3,245,652
|
|
Operating income for reportable segments
|
211,667
|
|
|
109,847
|
|
|
321,514
|
|
|||
Assets used in the business
|
1,314,011
|
|
|
969,540
|
|
|
2,283,551
|
|
|||
Depreciation and amortization of property
|
17,133
|
|
|
4,063
|
|
|
21,196
|
|
|||
Capital expenditures
|
17,063
|
|
|
3,052
|
|
|
20,115
|
|
|||
Year Ended June 30, 2019
|
|
|
|
|
|
||||||
Net sales
|
$
|
2,452,905
|
|
|
$
|
1,019,834
|
|
|
$
|
3,472,739
|
|
Operating income for reportable segments
|
254,954
|
|
|
112,117
|
|
|
367,071
|
|
|||
Assets used in the business
|
1,265,093
|
|
|
1,066,604
|
|
|
2,331,697
|
|
|||
Depreciation and amortization of property
|
15,982
|
|
|
4,254
|
|
|
20,236
|
|
|||
Capital expenditures
|
16,475
|
|
|
2,495
|
|
|
18,970
|
|
|||
Year Ended June 30, 2018
|
|
|
|
|
|
||||||
Net sales
|
$
|
2,346,418
|
|
|
$
|
726,856
|
|
|
$
|
3,073,274
|
|
Operating income for reportable segments
|
238,322
|
|
|
83,175
|
|
|
321,497
|
|
|||
Assets used in the business
|
1,198,296
|
|
|
1,087,445
|
|
|
2,285,741
|
|
|||
Depreciation and amortization of property
|
15,336
|
|
|
2,462
|
|
|
17,798
|
|
|||
Capital expenditures
|
18,492
|
|
|
4,738
|
|
|
23,230
|
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Operating income for reportable segments
|
$
|
321,514
|
|
|
$
|
367,071
|
|
|
$
|
321,497
|
|
Adjustments for:
|
|
|
|
|
|
||||||
Intangible amortization — Service Center Based Distribution
|
12,385
|
|
|
13,639
|
|
|
17,375
|
|
|||
Intangible amortization — Fluid Power & Flow Control
|
29,168
|
|
|
28,244
|
|
|
14,690
|
|
|||
Intangible Impairment — Service Center Based Distribution
|
—
|
|
|
31,594
|
|
|
—
|
|
|||
Goodwill Impairment — Fluid Power & Flow Control
|
131,000
|
|
|
—
|
|
|
—
|
|
|||
Corporate and other expense, net
|
59,972
|
|
|
59,806
|
|
|
63,605
|
|
|||
Total operating income
|
88,989
|
|
|
233,788
|
|
|
225,827
|
|
|||
Interest expense, net
|
36,535
|
|
|
40,188
|
|
|
23,485
|
|
|||
Other income, net
|
(2,782
|
)
|
|
(881
|
)
|
|
(2,376
|
)
|
|||
Income before income taxes
|
$
|
55,236
|
|
|
$
|
194,481
|
|
|
$
|
204,718
|
|
June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Long-Lived Assets:
|
|
|
|
|
|
||||||
United States
|
$
|
523,739
|
|
|
$
|
474,910
|
|
|
$
|
501,373
|
|
Canada
|
23,865
|
|
|
13,291
|
|
|
50,261
|
|
|||
Other Countries
|
8,148
|
|
|
4,968
|
|
|
5,656
|
|
|||
Total
|
$
|
555,752
|
|
|
$
|
493,169
|
|
|
$
|
557,290
|
|
Year Ended June 30,
|
2020
|
|
|
2019
|
|
|
2018
|
|
|||
Unrealized gain on assets held in rabbi trust for a non-qualified deferred compensation plan
|
$
|
(458
|
)
|
|
$
|
(689
|
)
|
|
$
|
(785
|
)
|
Foreign currency transaction (gains) losses
|
(2,463
|
)
|
|
334
|
|
|
(210
|
)
|
|||
Net other periodic post-employment (benefits) costs
|
(120
|
)
|
|
(85
|
)
|
|
245
|
|
|||
Life insurance expense (income), net
|
233
|
|
|
(479
|
)
|
|
(1,628
|
)
|
|||
Other, net
|
26
|
|
|
38
|
|
|
2
|
|
|||
Total other income, net
|
$
|
(2,782
|
)
|
|
$
|
(881
|
)
|
|
$
|
(2,376
|
)
|
|
|
|
|
|
|
|
|
|
Per Common Share
|
||||||||||||||
|
Net Sales
|
|
|
Gross Profit
|
|
|
Operating Income (loss)
|
|
|
Net Income (loss)
|
|
|
Net Income (loss)
|
|
|
Cash Dividend
|
|
||||||
2020
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First Quarter
|
$
|
856,404
|
|
|
$
|
251,460
|
|
|
$
|
61,166
|
|
|
$
|
38,799
|
|
|
$
|
1.00
|
|
|
$
|
0.31
|
|
Second Quarter
|
833,375
|
|
|
241,234
|
|
|
58,745
|
|
|
38,031
|
|
|
0.97
|
|
|
0.31
|
|
||||||
Third Quarter
|
830,797
|
|
|
236,752
|
|
|
(77,950
|
)
|
|
(82,777
|
)
|
|
(2.14
|
)
|
|
0.32
|
|
||||||
Fourth Quarter
|
725,076
|
|
|
208,290
|
|
|
47,028
|
|
|
29,989
|
|
|
0.77
|
|
|
0.32
|
|
||||||
|
$
|
3,245,652
|
|
|
$
|
937,736
|
|
|
$
|
88,989
|
|
|
$
|
24,042
|
|
|
$
|
0.62
|
|
|
$
|
1.26
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
First Quarter
|
$
|
864,515
|
|
|
$
|
251,853
|
|
|
$
|
66,339
|
|
|
$
|
48,938
|
|
|
$
|
1.24
|
|
|
$
|
0.30
|
|
Second Quarter
|
840,038
|
|
|
242,860
|
|
|
60,965
|
|
|
38,717
|
|
|
0.99
|
|
|
0.30
|
|
||||||
Third Quarter
|
885,443
|
|
|
255,559
|
|
|
34,509
|
|
|
16,535
|
|
|
0.42
|
|
|
0.31
|
|
||||||
Fourth Quarter
|
882,743
|
|
|
257,351
|
|
|
71,975
|
|
|
39,803
|
|
|
1.02
|
|
|
0.31
|
|
||||||
|
$
|
3,472,739
|
|
|
$
|
1,007,623
|
|
|
$
|
233,788
|
|
|
$
|
143,993
|
|
|
$
|
3.68
|
|
|
$
|
1.22
|
|
/s/ Neil A. Schrimsher
|
|
/s/ David K. Wells
|
President & Chief Executive Officer
|
|
Vice President - Chief Financial Officer & Treasurer
|
Plan Category
|
Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights
|
|
Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans
|
||||||
Equity compensation plans approved by security holders
|
1,606,961
|
|
|
|
$51.01
|
|
*
|
||||
Equity compensation plans not approved by
security holders
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
Total
|
1,606,961
|
|
|
|
$51.01
|
|
*
|
*
|
The 2019 Long-Term Performance Plan was adopted in October 2019 to replace the 2015 Long-Term Performance Plan and, similarly, the 2015 Long-Term Performance Plan replaced the 2011 Long-Term Performance Plan, which itself had replaced the 2007 Long-Term Performance Plan. Stock options, stock appreciation rights, and other awards remain outstanding under the 2007, 2011, and 2015 plans, but no new awards are made under those plans. The aggregate number of shares that remained available for awards under the 2019 Long-Term Performance Plan at June 30, 2020 was 2,221,129.
|
•
|
Report of Independent Registered Public Accounting Firm
|
|
|
|
|
•
|
Statements of Consolidated Income for the Years Ended June 30, 2020, 2019, and 2018
|
|
|
|
|
•
|
Statements of Consolidated Comprehensive Income for the Years Ended June 30, 2020, 2019, and 2018
|
|
|
|
|
•
|
Consolidated Balance Sheets at June 30, 2020 and 2019
|
|
|
|
|
•
|
Statements of Consolidated Cash Flows for the Years Ended June 30, 2020, 2019, and 2018
|
|
|
|
|
•
|
Statements of Consolidated Shareholders' Equity For the Years Ended June 30, 2020, 2019, and 2018
|
|
|
|
|
•
|
Notes to Consolidated Financial Statements for the Years Ended June 30, 2020, 2019, and 2018
|
|
|
|
|
•
|
Supplementary Data:
|
|
|
|
|
|
•
|
Quarterly Operating Results
|
|
Page No.
|
|
|
|
|
|
Schedule II - Valuation and Qualifying Accounts: Pg. 72
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
*10.1
|
A written description of Applied's director compensation program is incorporated by reference to Applied’s proxy statement for the annual meeting of shareholders to be held October 27, 2020 under the caption “Director Compensation.”
|
|
|
*10.2
|
|
|
|
*10.3
|
|
|
|
*10.4
|
|
|
|
*10.5
|
|
|
|
*10.6
|
|
|
|
*10.7
|
|
|
|
*10.8
|
|
|
|
*10.9
|
|
|
|
*10.10
|
|
|
|
*10.11
|
|
|
|
*10.12
|
|
|
|
*10.13
|
|
|
|
*10.14
|
|
|
|
*10.15
|
|
|
|
*10.16
|
|
|
|
*10.17
|
|
|
|
*10.18
|
|
|
|
*10.19
|
|
|
|
*10.20
|
|
|
|
*10.21
|
|
|
|
*10.22
|
|
|
|
*10.23
|
|
|
|
*10.24
|
|
|
|
*10.25
|
|
|
|
*10.26
|
|
|
|
*10.27
|
|
|
|
*10.28
|
|
|
|
*10.29
|
|
|
|
*10.30
|
|
|
|
*10.31
|
|
|
|
*10.32
|
|
|
|
*10.33
|
|
|
|
21
|
|
|
|
23
|
|
|
|
24
|
|
|
|
31
|
|
|
|
32
|
|
|
|
95
|
|
|
|
101.INS
|
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.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
|
COLUMN A
|
|
COLUMN B
|
|
COLUMN C
|
|
|
COLUMN D
|
|
|
COLUMN E
|
||||||||||||
DESCRIPTION
|
|
Balance at Beginning of Period
|
|
|
Additions Charged to Cost and Expenses
|
|
|
Additions (Deductions) Charged to Other Accounts
|
|
|
|
Deductions from Reserve
|
|
|
|
Balance at End of Period
|
|
|||||
Year Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reserve deducted from assets to which it applies —
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
|
$
|
10,498
|
|
|
$
|
14,055
|
|
|
$
|
—
|
|
|
|
$
|
10,892
|
|
(C)
|
|
$
|
13,661
|
|
Returns reserve
|
|
7,265
|
|
|
—
|
|
|
2,618
|
|
(B)
|
|
—
|
|
|
|
9,883
|
|
|||||
|
|
$
|
17,763
|
|
|
$
|
14,055
|
|
|
$
|
2,618
|
|
|
|
$
|
10,892
|
|
|
|
$
|
23,544
|
|
Year Ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Reserve deducted from assets to which it applies —
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for doubtful accounts
|
|
$
|
10,964
|
|
|
$
|
4,058
|
|
|
$
|
—
|
|
|
|
$
|
4,524
|
|
(C)
|
|
$
|
10,498
|
|
Returns reserve
|
|
2,602
|
|
|
738
|
|
|
3,925
|
|
(B)
|
|
—
|
|
|
|
7,265
|
|
|||||
|
|
$
|
13,566
|
|
|
$
|
4,796
|
|
|
$
|
3,925
|
|
|
|
$
|
4,524
|
|
|
|
$
|
17,763
|
|
Year Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Reserve deducted from assets to which it applies —
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
|
$
|
8,056
|
|
|
$
|
2,803
|
|
|
$
|
3,548
|
|
(A)
|
|
$
|
3,443
|
|
(C)
|
|
$
|
10,964
|
|
Returns reserve
|
|
1,572
|
|
|
—
|
|
|
1,030
|
|
(A)
|
|
—
|
|
|
|
2,602
|
|
|||||
|
|
$
|
9,628
|
|
|
$
|
2,803
|
|
|
$
|
4,578
|
|
|
|
$
|
3,443
|
|
|
|
$
|
13,566
|
|
(A)
|
Amounts in the year ending June 30, 2018 represent reserves recorded through purchase accounting for acquisitions made during the year of $3,548 and for the return of merchandise by customers of $1,030.
|
(B)
|
Amounts in the year ending June 30, 2020 and 2019 represent reserves recorded for the return of merchandise by customers. The Company adopted ASC 606 - Revenue from Contracts with Customers effective July 1, 2018 which requires the Company's sales returns reserve to be established at the gross sales value with an asset established for the value of the expected product to be returned.
|
(C)
|
Amounts represent uncollectible accounts charged off.
|
/s/ Neil A. Schrimsher
|
|
/s/ David K. Wells
|
Neil A. Schrimsher
President & Chief Executive Officer
|
|
David K. Wells
Vice President-Chief Financial Officer
& Treasurer
|
|
|
|
/s/ Christopher Macey
|
|
|
Christopher Macey
Corporate Controller (Principal Accounting Officer) |
|
|
/s/ Fred D. Bauer
|
Fred D. Bauer, as attorney in fact
|
for persons indicated by “*”
|
Name
|
|
Jurisdiction of
Incorporation or Organization
|
* Air Draulics Engineering Co.
|
|
Tennessee
|
|
|
|
AIT Canada, ULC
|
|
Nova Scotia
|
|
|
|
AIT Holding Corp.
|
|
Alberta
|
|
|
|
AIT International Inc.
|
|
Ohio
|
|
|
|
AIT Receivables LLC
|
|
Delaware
|
|
|
|
Applied Australia Holdings Pty Ltd.
|
|
Australia
|
|
|
|
Applied Canada Holdings, ULC
|
|
Nova Scotia
|
|
|
|
* Applied Fluid Power Holdings, LLC
|
|
Ohio
|
|
|
|
Applied Industrial Technologies - CA LLC
|
|
Delaware
|
|
|
|
Applied Industrial Technologies - Capital, Inc.
|
|
Delaware
|
|
|
|
Applied Industrial Technologies - Dixie, Inc.
|
|
Tennessee
|
|
|
|
Applied Industrial Technologies, LP
|
|
Ontario
|
|
|
|
Applied Industrial Technologies Limited
|
|
New Zealand
|
|
|
|
Applied Industrial Technologies - PA LLC
|
|
Pennsylvania
|
|
|
|
Applied Industrial Technologies - PACIFIC LLC
|
|
Delaware
|
|
|
|
Applied Industrial Technologies Canada, ULC
|
|
Nova Scotia
|
|
|
|
Applied Industrial Technologies Pty Ltd.
|
|
Australia
|
|
|
|
Applied Luxembourg, S.a.r.l.
|
|
Luxembourg
|
|
|
|
* Applied Maintenance Supplies & Solutions, LLC
|
|
Ohio
|
|
|
|
* Applied México, S.A. de C.V.
(97%-owned by subsidiaries of Applied Industrial Technologies, Inc.)
|
|
Mexico
|
|
|
|
Applied Mexico Holdings, S.A. de C.V.
|
|
Mexico
|
|
|
|
Applied Northern Holdings, ULC
|
|
Nova Scotia
|
|
|
|
Applied Nova Scotia Company
|
|
Nova Scotia
|
|
|
|
Applied US, L.P.
|
|
Delaware
|
|
|
|
* Applied US Energy, Inc.
|
|
Ohio
|
|
|
|
* Applied US Energy-Oklahoma, LLC
|
|
Ohio
|
|
|
|
* Atlantic Fasteners Co., LLC
|
|
Ohio
|
|
|
|
BER International, Inc.
|
|
Barbados
|
|
|
|
* Baro Controls, Inc.
|
|
Texas
|
|
|
|
* Baro Process Products, Inc.
|
|
Texas
|
|
|
|
* Basin Engine & Pump, Inc.
|
|
Texas
|
|
|
|
* Bay Advanced Technologies, LLC
|
|
Ohio
|
|
|
|
* Bay Advanced Technologies Singapore Pte. Ltd.
|
|
Singapore
|
|
|
|
Bearing Sales & Services Inc.
|
|
Washington
|
|
|
|
Bearings Pan American, Inc.
|
|
Ohio
|
|
|
|
* Carolina Fluid Components, LLC
|
|
Ohio
|
|
|
|
* Corrosion Fluid Products Corp.
|
|
Michigan
|
|
|
|
* DTS Fluid Power, LLC
|
|
Ohio
|
|
|
|
* Disenos Construcciones y Fabricaciones Hispanoamericanas, S.A.
|
|
Mexico
|
|
|
|
* Eads Distribution, LLC
|
|
Delaware
|
|
|
|
* ESI Acquisition Corporation
(d/b/a Engineered Sales, Inc., ESI Power Hydraulics, and Applied Engineered Systems)
|
|
Ohio
|
|
|
|
* FCX Performance, Inc.
|
|
Ohio
|
|
|
|
* Fluid Power Sales, LLC
|
|
Ohio
|
|
|
|
* FluidTech, LLC
|
|
Ohio
|
|
|
|
* HUB Industrial Supply, LLC
|
|
Ohio
|
|
|
|
* Hughes Machinery Company
|
|
Missouri
|
|
|
|
* HydroAir Hughes, LLC
|
|
Ohio
|
|
|
|
* HyQuip, LLC
|
|
Ohio
|
|
|
|
* Olympus Controls Corp.
|
|
Oregon
|
|
|
|
* Power Systems AHS, LLC
|
|
Ohio
|
|
|
|
* Pump Energy, Inc.
|
|
Delaware
|
|
|
|
* Pump Pros, Inc.
|
|
Ohio
|
|
|
|
* R. L. Stone Company, Inc.
|
|
New York
|
|
|
|
* Rafael Benitez Carrillo Inc.
|
|
Puerto Rico
|
|
|
|
* Rodensa Mexico S.A. de C.V.
|
|
Mexico
|
|
|
|
* S. G. Morris Co., LLC
|
|
Ohio
|
|
|
|
* Seals Unlimited Holding Co., Inc.
|
|
Ontario
|
|
|
|
* Seals Unlimited (1976) Incorporated
|
|
Ontario
|
|
|
|
* Sentinel Fluid Controls, LLC
|
|
Ohio
|
|
|
|
* Spencer Fluid Power, Inc.
|
|
Ohio
|
|
|
|
* Texas Oilpatch Services, LLC
|
|
Ohio
|
|
|
|
* VYCMEX Mexico, S.A. de C.V.
|
|
Mexico
|
* Operating companies that do not conduct business under Applied Industrial Technologies trade name
|
|
|
Date: 8/11/2020
|
|
By: /s/ Madhuri A. Andrews
|
Date: 8/07/2020
|
|
By: /s/ Peter A. Dorsman
|
Date: 8/07/2020
|
|
By: /s/ Mary Dean Hall
|
Date: 8/12/2020
|
|
By: /s/ D. P. Komnenovich
|
Date: 8/11/2020
|
|
By: /s/ Robert J. Pagano, Jr.
|
Date: 8/12/2020
|
|
By: /s/ Vincent K. Petrella
|
Date: 8/11/2020
|
|
By: /s/ Joe A. Raver
|
Date: 8/09/2020
|
|
By: /s/ Peter C. Wallace
|
1.
|
|
I have reviewed this annual report on Form 10-K of Applied Industrial Technologies, Inc.;
|
|
|
|
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 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 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 function):
|
|
|
|
|
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.
|
Date: August 14, 2020
|
|
/s/ Neil A. Schrimsher
|
|
|
Neil A. Schrimsher
|
|
|
President & Chief Executive Officer
|
1.
|
|
I have reviewed this annual report on Form 10-K of Applied Industrial Technologies, Inc.;
|
|
|
|
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 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 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 function):
|
|
|
|
|
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.
|
Date: August 14, 2020
|
|
/s/ David K. Wells
|
|
|
David K. Wells
|
|
|
Vice President-Chief Financial Officer & Treasurer
|
(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.
|
/s/ Neil A. Schrimsher
|
|
/s/ David K. Wells
|
Neil A. Schrimsher
President & Chief Executive Officer
|
|
David K. Wells
Vice President-Chief Financial Officer & Treasurer
|
|
|
|
Dated: August 14, 2020
|
|
|
Mine or Operating Name / MSHA Identification Number
|
(#) Section 104 S&S Citations
|
(#) Section 104(b) Orders
|
(#) Section 104(d) Citations and Orders
|
(#) Section 110(b)(2) Violations
|
(#) Section 107(a) Orders
|
($) Total Dollar Value of MSHA Assessments Proposed
|
(#) Total Number of Mining Related Fatalities
|
(yes/no) Received Notice of Pattern of Violations Under Section 104(e)
|
(yes/no) Received Notice of Potential to Have Pattern Under Section 104(e)
|
(#) Legal Actions Pending as of 6/30/2020
|
(#) Legal Actions Initiated During Period
|
(#) Legal Actions Resolved During the Period
|
(1)
|
(2)
|
(3)
|
(4)
|
(5)
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
A.R. Wilson Quarry
#0400119
|
2
|
0
|
0
|
0
|
0
|
434
|
0
|
No
|
No
|
0
|
0
|
0
|
Stillwater Mine
#2401490
|
1
|
0
|
1
|
0
|
1
|
3,573
|
0
|
No
|
No
|
0
|
0
|
0
|
(1)
|
United States mines.
|
|
|
(2)
|
Total number of citations received from MSHA under section 104 of the Mine Act for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated.
|
|
|
(3)
|
Total number of orders under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA.
|
|
|
(4)
|
Total number of citations and orders for unwarrantable failure to comply with mandatory health or safety standards under section 104(d) of the Mine Act.
|
|
|
(5)
|
Total number of flagrant violations under section 110(b)(2) of the Mine Act.
|
|
|
(6)
|
Total number of imminent danger orders issued under section 107(a) of the Mine Act.
|