[X] | ANNUAL 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 | 34-0117420 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
Title of each class | Name of each exchange on which registered |
Common Stock, without par value | New York Stock Exchange |
Large accelerated filer X | Accelerated filer __ |
Non-accelerated filer __ | Smaller reporting company __ |
Emerging growth company __ |
Class | Outstanding at August 11, 2017 |
Common Stock, without par value | 39,045,291 |
Page | ||
PART I | ||
Business | ||
Risk Factors | ||
Unresolved Staff Comments | ||
Properties | ||
Legal Proceedings | ||
Mine Safety Disclosures | ||
PART II | ||
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | ||
Selected Financial Data | ||
Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Quantitative and Qualitative Disclosures about Market Risk | ||
Financial Statements and Supplementary Data | ||
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | ||
Controls and Procedures | ||
Other Information | ||
PART III | ||
Directors, Executive Officers and Corporate Governance | ||
Executive Compensation | ||
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | ||
Certain Relationships and Related Transactions, and Director Independence | ||
Principal Accountant Fees and Services | ||
PART IV | ||
Exhibits and Financial Statement Schedules | ||
▪ | 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 |
▪ | Applied's Code of Business Ethics |
▪ | Applied's Board of Directors Governance Principles and Practices |
▪ | Applied's Director Independence Standards |
▪ | Charters for the Audit, Corporate Governance, and Executive Organization & Compensation Committees of Applied's Board of Directors |
▪ | Service Center-Based Distribution. We distribute a wide range of industrial products through service centers across North America, Australia, and New Zealand. Customers primarily purchase our products for scheduled maintenance of their machinery and equipment and for emergency repairs. |
▪ | Fluid Power Businesses. Our specialized fluid power businesses primarily market products and services to customers within the businesses' geographic regions. In the United States, the businesses also market products and services through our service center network. In addition to distributing hydraulic and pneumatic power components, the businesses design and assemble hydraulic and electro-hydraulic power units and control systems, electronic control systems, pneumatic and electro-pneumatic panels and sub-assemblies, fabricated aluminum assemblies, lubrication systems, hydraulic manifolds, and pump assemblies. They also perform equipment repair and offer technical advice to customers. Customers include firms purchasing for MRO needs, as well as for OEM applications. |
▪ | changes in customer preferences for products and services of the nature, brands, quality, or cost sold by us; |
▪ | changes in customer procurement policies and practices; |
▪ | changes in the market prices for products and services relative to the costs of providing them; |
▪ | changes in operating expenses; |
▪ | organizational changes within the Company; |
▪ | government regulation, legislation, or policies, including with respect to federal tax policy (e.g., affecting tax rates, the LIFO inventory accounting method, or the taxation of foreign-sourced income) and international trade; |
▪ | the variability and timing of new business opportunities including acquisitions, customer relationships, and supplier authorizations; |
▪ | the incurrence of debt and contingent liabilities in connection with acquisitions; |
▪ | volatility of our stock price and the resulting impact on our consolidated financial statements; and |
▪ | changes in accounting policies and practices that could impact our financial reporting and increase compliance costs. |
Location of Principal Owned Real Property | Type of Facility |
Cleveland, Ohio | Corporate headquarters |
Lake City, Florida | Offices and warehouse |
Atlanta, Georgia | Distribution center and service center |
Florence, Kentucky | Distribution center |
Highland Heights, Ohio | Fluid power shop |
Agawam, Massachusetts | Offices and warehouse |
Carlisle, Pennsylvania | Distribution center |
Fort Worth, Texas | Distribution center and rubber shop |
Clairmont, Alberta | Service center and fluid power shop |
Location of Principal Leased Real Property | Type of Facility |
Fontana, California | Distribution center, rubber shop, fluid power shop, and service center |
Newark, California | Fluid power shop |
Denver, Colorado | Rubber shop and service center |
Lenexa, Kansas | Fluid power shop |
Chanhassen, Minnesota | Fluid power shop |
Billings, Montana | Fluid power shop |
Elyria, Ohio | Product return center and service center |
Parma, Ohio | Offices and warehouse |
Portland, Oregon | Distribution center |
Houston, Texas | Service center and shop |
Kent, Washington | Offices and fluid power shop |
Longview, Washington | Service center, rubber shop, and fluid power shop |
Appleton, Wisconsin | Offices, service center, and rubber shop |
Edmonton, Alberta | Service center and shop |
Nisku, Alberta | Offices, service center, and shops |
Winnipeg, Manitoba | Distribution center and service center |
Name | Positions and Experience | Age |
Neil A. Schrimsher | President since August 2013 and Chief Executive Officer since 2011. | 53 |
Todd A. Barlett | Vice President-Acquisitions and Global Business Development since 2004. | 62 |
Fred D. Bauer | Vice President-General Counsel & Secretary since 2002. | 51 |
Mark O. Eisele | Vice President-Chief Financial Officer & Treasurer since 2004. | 60 |
Warren E. Hoffner | Vice President-General Manager, Fluid Power since 2003. The Board of Directors designated him an executive officer in October 2015. | 57 |
Kurt W. Loring | Vice President-Chief Human Resources Officer since July 2014. Prior to then Mr. Loring was Vice President, Human Resources for the Forged Products segment of Precision Castparts Corporation (formerly NYSE: PCP). The $4.3 billion segment, with greater than 5,000 employees, is a world-leading producer of complex forgings and high-performance nickel-based alloys and super alloys for aerospace, power generation, and general industrial applications. | 48 |
Price Range | ||||||||||||||
Shares Traded | Average Daily Volume | High | Low | |||||||||||
2017 | ||||||||||||||
First Quarter | 9,924,600 | 155,100 | $ | 48.61 | $ | 44.03 | ||||||||
Second Quarter | 13,423,500 | 213,100 | 62.65 | 43.50 | ||||||||||
Third Quarter | 12,986,200 | 209,500 | 66.65 | 58.80 | ||||||||||
Fourth Quarter | 10,868,100 | 172,500 | 69.00 | 57.10 | ||||||||||
2016 | ||||||||||||||
First Quarter | 17,146,300 | 267,900 | $ | 42.65 | $ | 37.15 | ||||||||
Second Quarter | 14,832,500 | 231,800 | 43.54 | 37.00 | ||||||||||
Third Quarter | 14,619,200 | 239,700 | 44.24 | 35.55 | ||||||||||
Fourth Quarter | 12,583,200 | 196,600 | 47.18 | 42.52 | ||||||||||
2015 | ||||||||||||||
First Quarter | 9,932,400 | 155,200 | $ | 52.62 | $ | 45.54 | ||||||||
Second Quarter | 11,023,400 | 172,200 | 50.00 | 42.92 | ||||||||||
Third Quarter | 17,181,400 | 281,700 | 46.05 | 39.76 | ||||||||||
Fourth Quarter | 16,892,300 | 268,100 | 45.22 | 39.54 |
Period | (a) Total Number of Shares (1) | (b) Average Price Paid per Share ($) | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (2) | |||||||
April 1, 2017 to April 30, 2017 | 92 | $64.02 | — | 1,450,000 | |||||||
May 1, 2017 to May 31, 2017 | — | — | — | 1,450,000 | |||||||
June 1, 2017 to June 30, 2017 | — | — | — | 1,450,000 | |||||||
Total | 92 | $64.02 | — | 1,450,000 |
(1) | During the quarter ended June 30, 2017, Applied purchased 92 shares in connection with an employee deferred compensation program. This purchase is not counted in the authorization in note (2). |
(2) | 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. |
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Consolidated Operations — Year Ended June 30 | ||||||||||||||||||||
Net sales | $ | 2,593,746 | $ | 2,519,428 | $ | 2,751,561 | $ | 2,459,878 | $ | 2,462,171 | ||||||||||
Depreciation and amortization of property | 15,306 | 15,966 | 16,578 | 13,977 | 12,501 | |||||||||||||||
Amortization: | ||||||||||||||||||||
Intangible assets | 24,371 | 25,580 | 25,797 | 14,023 | 13,233 | |||||||||||||||
SARs and stock options | 1,891 | 1,543 | 1,610 | 1,808 | 2,317 | |||||||||||||||
Operating income (b) | 174,590 | 88,801 | 184,619 | 164,358 | 176,399 | |||||||||||||||
Net income (a) (b) | 133,910 | 29,577 | 115,484 | 112,821 | 118,149 | |||||||||||||||
Per share data: | ||||||||||||||||||||
Net income: | ||||||||||||||||||||
Basic | 3.43 | 0.75 | 2.82 | 2.69 | 2.81 | |||||||||||||||
Diluted (a) (b) | 3.40 | 0.75 | 2.80 | 2.67 | 2.78 | |||||||||||||||
Cash dividend | 1.14 | 1.10 | 1.04 | 0.96 | 0.88 | |||||||||||||||
Year-End Position — June 30 | ||||||||||||||||||||
Working capital | $ | 572,789 | $ | 507,238 | $ | 535,938 | $ | 545,193 | $ | 491,380 | ||||||||||
Long-term debt (including portion classified as current) | 291,982 | 328,334 | 320,995 | 170,712 | — | |||||||||||||||
Total assets | 1,387,595 | 1,312,025 | 1,432,556 | 1,334,169 | 1,058,706 | |||||||||||||||
Shareholders’ equity | 745,256 | 657,916 | 741,328 | 800,308 | 759,615 | |||||||||||||||
Year-End Statistics — June 30 | ||||||||||||||||||||
Current ratio | 2.8 | 2.8 | 2.7 | 2.9 | 3.0 | |||||||||||||||
Operating facilities | 552 | 559 | 565 | 538 | 522 | |||||||||||||||
Shareholders of record (c) | 4,687 | 5,372 | 6,016 | 6,330 | 6,319 | |||||||||||||||
Return on assets (a) (b) (d) | 10.2 | % | 2.2 | % | 7.9 | % | 10.2 | % | 11.6 | % | ||||||||||
Return on equity (a) (b) (e) | 19.1 | % | 4.2 | % | 15.0 | % | 14.5 | % | 16.5 | % | ||||||||||
Capital expenditures (f) | $ | 17,045 | $ | 13,130 | $ | 14,933 | $ | 20,190 | $ | 12,214 | ||||||||||
Cash Returned to Shareholders During the Year | ||||||||||||||||||||
Dividends paid | $ | 44,619 | $ | 43,330 | $ | 42,663 | $ | 40,410 | $ | 37,194 | ||||||||||
Purchases of treasury shares | 8,242 | 37,465 | 76,515 | 36,732 | 53 | |||||||||||||||
Total | $ | 52,861 | $ | 80,795 | $ | 119,178 | $ | 77,142 | $ | 37,247 |
(a) | 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%. |
(b) | 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%. |
(c) | Includes participant-shareholders in the Applied Industrial Technologies, Inc. Retirement Savings Plan and shareholders in the Company's direct stock purchase program. |
(d) | Return on assets is calculated as net income divided by monthly average assets. |
(e) | 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). |
(f) | Capital expenditures for fiscal 2014 included the purchase of our headquarters facility which used $10.0 million of cash. Capital expenditures for fiscal 2013 included $5.6 million related to Applied's Enterprise Resource Planning (ERP) system project. See Item 7 under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operations” for further description of the ERP project. |
Index Reading | |||
Month | MCU | PMI | IP |
June 2017 | 76.6 | 57.8 | 103.3 |
May 2017 | 76.4 | 54.9 | 103.1 |
April 2017 | 76.4 | 54.8 | 103.5 |
March 2017 | 75.8 | 57.2 | 102.5 |
December 2016 | 76.0 | 54.5 | 102.6 |
September 2016 | 75.6 | 51.7 | 102.0 |
June 2016 | 75.8 | 52.8 | 102.1 |
Year Ended June 30, As a % of Net Sales | Change in $'s Versus Prior Period | |||||||
2017 | 2016 | % Change | ||||||
Net Sales | 100.0 | % | 100.0 | % | 2.9 | % | ||
Gross Profit Margin | 28.4 | % | 28.1 | % | 4.3 | % | ||
Selling, Distribution & Administrative | 21.7 | % | 22.0 | % | 1.7 | % | ||
Operating Income | 6.7 | % | 3.5 | % | 96.6 | % | ||
Net Income | 5.2 | % | 1.2 | % | 352.8 | % |
Year Ended June 30, As a % of Net Sales | Change in $'s Versus Prior Period | |||||||
2016 | 2015 | % Change | ||||||
Net Sales | 100.0 | % | 100.0 | % | (8.4 | )% | ||
Gross Profit Margin | 28.1 | % | 28.0 | % | (8.1 | )% | ||
Selling, Distribution & Administrative | 22.0 | % | 21.3 | % | (5.4 | )% | ||
Operating Income | 3.5 | % | 6.7 | % | (51.9 | )% | ||
Net Income | 1.2 | % | 4.2 | % | (74.4 | )% |
Country | Amount | ||
United Sates | $ | 54,713 | |
Canada | 32,041 | ||
Other Countries | 18,303 | ||
Total | $ | 105,057 |
Year Ended June 30, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Net Cash Provided by (Used in): | |||||||||||
Operating Activities | $ | 164,619 | $ | 162,014 | $ | 157,007 | |||||
Investing Activities | (16,894 | ) | (75,031 | ) | (173,621 | ) | |||||
Financing Activities | (103,349 | ) | (93,007 | ) | 22,220 | ||||||
Exchange Rate Effect | 820 | (3,585 | ) | (7,325 | ) | ||||||
Increase (Decrease) in Cash and Cash Equivalents | $ | 45,196 | $ | (9,609 | ) | $ | (1,719 | ) |
June 30, | 2017 | 2016 | |||||
Accounts receivable, gross | $ | 400,559 | $ | 358,891 | |||
Allowance for doubtful accounts | 9,628 | 11,034 | |||||
Accounts receivable, net | $ | 390,931 | $ | 347,857 | |||
Allowance for doubtful accounts, % of gross receivables | 2.4 | % | 3.1 | % | |||
Year Ended June 30, | 2017 | 2016 | |||||
Provision for losses on accounts receivable | $ | 2,071 | $ | 4,303 | |||
Provision as a % of net sales | 0.08 | % | 0.17 | % |
Total | Period Less Than 1 yr | Period 2-3 yrs | Period 4-5 yrs | Period Over 5 yrs | Other | ||||||||||||||||||
Operating leases | $ | 95,100 | $ | 29,000 | $ | 38,000 | $ | 13,500 | $ | 14,600 | — | ||||||||||||
Planned funding of post-retirement obligations | 18,800 | 3,000 | 6,900 | 1,700 | 7,200 | — | |||||||||||||||||
Unrecognized income tax benefit liabilities, including interest and penalties | 4,300 | 4,300 | |||||||||||||||||||||
Long-term debt obligations | 291,900 | 4,900 | 39,500 | 182,000 | 65,500 | — | |||||||||||||||||
Interest on long-term debt obligations (1) | 30,300 | 8,100 | 15,200 | 6,000 | 1,000 | — | |||||||||||||||||
Acquisition holdback payments | 3,206 | 672 | 2,384 | 75 | 75 | — | |||||||||||||||||
Total Contractual Cash Obligations | $ | 443,606 | $ | 45,672 | $ | 101,984 | $ | 203,275 | $ | 88,375 | $ | 4,300 |
Year Ended June 30, | 2017 | 2016 | 2015 | |||||||||
Net Sales | $ | 2,593,746 | $ | 2,519,428 | $ | 2,751,561 | ||||||
Cost of Sales | 1,856,051 | 1,812,006 | 1,981,747 | |||||||||
Gross Profit | 737,695 | 707,422 | 769,814 | |||||||||
Selling, Distribution and Administrative, including depreciation | 563,105 | 553,827 | 585,195 | |||||||||
Goodwill Impairment | — | 64,794 | — | |||||||||
Operating Income | 174,590 | 88,801 | 184,619 | |||||||||
Interest Expense | 8,831 | 9,004 | 8,121 | |||||||||
Interest Income | (290 | ) | (241 | ) | (252 | ) | ||||||
Other (Income) Expense, net | (917 | ) | 1,060 | 879 | ||||||||
Income Before Income Taxes | 166,966 | 78,978 | 175,871 | |||||||||
Income Tax Expense | 33,056 | 49,401 | 60,387 | |||||||||
Net Income | $ | 133,910 | $ | 29,577 | $ | 115,484 | ||||||
Net Income Per Share — Basic | $ | 3.43 | $ | 0.75 | $ | 2.82 | ||||||
Net Income Per Share — Diluted | $ | 3.40 | $ | 0.75 | $ | 2.80 |
Year Ended June 30, | 2017 | 2016 | 2015 | |||||||||
Net income per the statements of consolidated income | $ | 133,910 | $ | 29,577 | $ | 115,484 | ||||||
Other comprehensive income (loss), before tax: | ||||||||||||
Foreign currency translation adjustments | 2,238 | (24,441 | ) | (58,233 | ) | |||||||
Postemployment benefits: | ||||||||||||
Actuarial gain (loss) on remeasurement | 2,038 | (1,998 | ) | (776 | ) | |||||||
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs | 506 | 518 | 286 | |||||||||
Unrealized gain (loss) on investment securities available for sale | 91 | (52 | ) | (38 | ) | |||||||
Total other comprehensive income (loss), before tax | 4,873 | (25,973 | ) | (58,761 | ) | |||||||
Income tax expense (benefit) related to items of other comprehensive income (loss) | 1,029 | (598 | ) | (205 | ) | |||||||
Other comprehensive income (loss), net of tax | 3,844 | (25,375 | ) | (58,556 | ) | |||||||
Comprehensive income | $ | 137,754 | $ | 4,202 | $ | 56,928 |
June 30, | 2017 | 2016 | ||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 105,057 | $ | 59,861 | ||||
Accounts receivable, less allowances of $9,628 and $11,034 | 390,931 | 347,857 | ||||||
Inventories | 345,145 | 338,221 | ||||||
Other current assets | 41,409 | 35,582 | ||||||
Total current assets | 882,542 | 781,521 | ||||||
Property — at cost | ||||||||
Land | 14,250 | 14,214 | ||||||
Buildings | 97,529 | 97,521 | ||||||
Equipment, including computers and software | 162,432 | 157,496 | ||||||
Total property — at cost | 274,211 | 269,231 | ||||||
Less accumulated depreciation | 166,143 | 161,466 | ||||||
Property — net | 108,068 | 107,765 | ||||||
Identifiable intangibles, net | 163,562 | 191,240 | ||||||
Goodwill | 206,135 | 202,700 | ||||||
Deferred tax assets | 8,985 | 12,277 | ||||||
Other assets | 18,303 | 16,522 | ||||||
Total Assets | $ | 1,387,595 | $ | 1,312,025 | ||||
Liabilities | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 180,614 | $ | 148,543 | ||||
Current portion of long-term debt | 4,814 | 3,247 | ||||||
Compensation and related benefits | 58,785 | 57,187 | ||||||
Other current liabilities | 65,540 | 65,306 | ||||||
Total current liabilities | 309,753 | 274,283 | ||||||
Long-term debt | 286,769 | 324,583 | ||||||
Post-employment benefits | 16,715 | 21,322 | ||||||
Other liabilities | 29,102 | 33,921 | ||||||
Total Liabilities | 642,339 | 654,109 | ||||||
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; 39,041 and 39,057 shares outstanding, respectively | 10,000 | 10,000 | ||||||
Additional paid-in capital | 164,655 | 162,529 | ||||||
Retained earnings | 1,033,751 | 944,821 | ||||||
Treasury shares — at cost (15,172 and 15,156 shares), respectively | (381,448 | ) | (373,888 | ) | ||||
Accumulated other comprehensive loss | (81,702 | ) | (85,546 | ) | ||||
Total Shareholders’ Equity | 745,256 | 657,916 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 1,387,595 | $ | 1,312,025 |
Year Ended June 30, | 2017 | 2016 | 2015 | |||||||||
Cash Flows from Operating Activities | ||||||||||||
Net income | $ | 133,910 | $ | 29,577 | $ | 115,484 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Goodwill impairment | — | 64,794 | — | |||||||||
Depreciation and amortization of property | 15,306 | 15,966 | 16,578 | |||||||||
Amortization of intangibles | 24,371 | 25,580 | 25,797 | |||||||||
Amortization of stock appreciation rights and options | 1,891 | 1,543 | 1,610 | |||||||||
Deferred income taxes | (2,852 | ) | (6,581 | ) | (4,961 | ) | ||||||
Provision for losses on accounts receivable | 2,071 | 4,303 | 2,597 | |||||||||
Unrealized foreign exchange transaction (gains) losses | (333 | ) | 61 | (727 | ) | |||||||
Other share-based compensation expense | 3,629 | 2,524 | 2,851 | |||||||||
(Gain) loss on sale of property | (1,541 | ) | 337 | (1,291 | ) | |||||||
Other | 103 | — | 45 | |||||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||||||
Accounts receivable | (42,267 | ) | 26,414 | 13,129 | ||||||||
Inventories | (3,624 | ) | 25,081 | (15,704 | ) | |||||||
Other operating assets | (6,162 | ) | 2,964 | 797 | ||||||||
Accounts payable | 32,076 | (28,644 | ) | 1,040 | ||||||||
Other operating liabilities | 8,041 | (1,905 | ) | (238 | ) | |||||||
Cash provided by Operating Activities | 164,619 | 162,014 | 157,007 | |||||||||
Cash Flows from Investing Activities | ||||||||||||
Property purchases | (17,045 | ) | (13,130 | ) | (14,933 | ) | ||||||
Proceeds from property sales | 2,924 | 603 | 1,932 | |||||||||
Net cash paid for acquisition of businesses, net of cash acquired | (2,773 | ) | (62,504 | ) | (160,620 | ) | ||||||
Cash used in Investing Activities | (16,894 | ) | (75,031 | ) | (173,621 | ) | ||||||
Cash Flows from Financing Activities | ||||||||||||
Net repayments under revolving credit facility, classified as long term | (33,000 | ) | (19,000 | ) | (17,000 | ) | ||||||
Borrowings under long-term debt facilities | — | 125,000 | 170,000 | |||||||||
Long-term debt repayments | (3,353 | ) | (98,662 | ) | (2,717 | ) | ||||||
Deferred financing costs | — | (719 | ) | — | ||||||||
Purchases of treasury shares | (8,242 | ) | (37,465 | ) | (76,515 | ) | ||||||
Dividends paid | (44,619 | ) | (43,330 | ) | (42,663 | ) | ||||||
Excess tax benefits from share-based compensation | — | 208 | 1,042 | |||||||||
Acquisition holdback payments | (11,307 | ) | (18,913 | ) | (7,693 | ) | ||||||
Exercise of stock appreciation rights and options | 656 | 896 | 235 | |||||||||
Taxes paid for shares withheld | (3,484 | ) | (1,022 | ) | (2,469 | ) | ||||||
Cash (used in) provided by Financing Activities | (103,349 | ) | (93,007 | ) | 22,220 | |||||||
Effect of exchange rate changes on cash | 820 | (3,585 | ) | (7,325 | ) | |||||||
Increase (decrease) in cash and cash equivalents | 45,196 | (9,609 | ) | (1,719 | ) | |||||||
Cash and cash equivalents at beginning of year | 59,861 | 69,470 | 71,189 | |||||||||
Cash and Cash Equivalents at End of Year | $ | 105,057 | $ | 59,861 | $ | 69,470 | ||||||
Supplemental Cash Flow Information | ||||||||||||
Cash paid during the year for: | ||||||||||||
Income taxes | $ | 38,772 | $ | 54,749 | $ | 69,272 | ||||||
Interest | $ | 8,561 | $ | 9,497 | $ | 5,851 |
For the Years Ended June 30, 2017, 2016 and 2015 | Shares of Common Stock Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Shares- at Cost | Accumulated Other Comprehensive Income (Loss) | Total Shareholders' Equity | ||||||||||||||||||||
Balance at July 1, 2014 | 41,563 | $ | 10,000 | $ | 156,999 | $ | 896,776 | $ | (261,852 | ) | $ | (1,615 | ) | $ | 800,308 | ||||||||||||
Net income | 115,484 | 115,484 | |||||||||||||||||||||||||
Other comprehensive income (loss) | (58,556 | ) | (58,556 | ) | |||||||||||||||||||||||
Cash dividends — $1.04 per share | (42,663 | ) | (42,663 | ) | |||||||||||||||||||||||
Purchases of common stock for treasury | (1,740 | ) | (76,515 | ) | (76,515 | ) | |||||||||||||||||||||
Treasury shares issued for: | |||||||||||||||||||||||||||
Exercise of stock appreciation rights and options | 34 | 552 | 415 | 967 | |||||||||||||||||||||||
Performance share awards | 12 | (425 | ) | 52 | (373 | ) | |||||||||||||||||||||
Restricted stock units | 36 | (1,312 | ) | 76 | (1,236 | ) | |||||||||||||||||||||
Deferred compensation plans | 1 | 24 | 21 | 45 | |||||||||||||||||||||||
Compensation expense — stock appreciation rights and options | 1,610 | 1,610 | |||||||||||||||||||||||||
Other share-based compensation expense | 2,851 | 2,851 | |||||||||||||||||||||||||
Other | (1 | ) | (227 | ) | (49 | ) | (318 | ) | (594 | ) | |||||||||||||||||
Balance at June 30, 2015 | 39,905 | 10,000 | 160,072 | 969,548 | (338,121 | ) | (60,171 | ) | 741,328 | ||||||||||||||||||
Net income | 29,577 | 29,577 | |||||||||||||||||||||||||
Other comprehensive income (loss) | (25,375 | ) | (25,375 | ) | |||||||||||||||||||||||
Cash dividends — $1.10 per share | (54,266 | ) | (54,266 | ) | |||||||||||||||||||||||
Purchases of common stock for treasury | (951 | ) | (37,465 | ) | (37,465 | ) | |||||||||||||||||||||
Treasury shares issued for: | |||||||||||||||||||||||||||
Exercise of stock appreciation rights and options | 64 | (391 | ) | 1,000 | 609 | ||||||||||||||||||||||
Performance share awards | 8 | (308 | ) | 116 | (192 | ) | |||||||||||||||||||||
Restricted stock units | 15 | (530 | ) | 232 | (298 | ) | |||||||||||||||||||||
Compensation expense — stock appreciation rights and options | 1,543 | 1,543 | |||||||||||||||||||||||||
Other share-based compensation expense | 2,524 | 2,524 | |||||||||||||||||||||||||
Other | 16 | (381 | ) | (38 | ) | 350 | (69 | ) | |||||||||||||||||||
Balance at June 30, 2016 | 39,057 | 10,000 | 162,529 | 944,821 | (373,888 | ) | (85,546 | ) | 657,916 | ||||||||||||||||||
Net income | 133,910 | 133,910 | |||||||||||||||||||||||||
Other comprehensive income (loss) | 3,844 | 3,844 | |||||||||||||||||||||||||
Cash dividends — $1.14 per share | (45,005 | ) | (45,005 | ) | |||||||||||||||||||||||
Purchases of common stock for treasury | (163 | ) | (8,242 | ) | (8,242 | ) | |||||||||||||||||||||
Treasury shares issued for: | |||||||||||||||||||||||||||
Exercise of stock appreciation rights and options | 111 | (2,218 | ) | 105 | (2,113 | ) | |||||||||||||||||||||
Performance share awards | 10 | (360 | ) | 126 | (234 | ) | |||||||||||||||||||||
Restricted stock units | 15 | (624 | ) | 227 | (397 | ) | |||||||||||||||||||||
Compensation expense — stock appreciation rights and options | 1,891 | 1,891 | |||||||||||||||||||||||||
Other share-based compensation expense | 3,629 | 3,629 | |||||||||||||||||||||||||
Other | 11 | (192 | ) | 25 | 224 | 57 | |||||||||||||||||||||
Balance at June 30, 2017 | 39,041 | $ | 10,000 | $ | 164,655 | $ | 1,033,751 | $ | (381,448 | ) | $ | (81,702 | ) | $ | 745,256 |
Knox Acquisition | |||
2015 | |||
Accounts receivable | $ | 19,100 | |
Inventories | 18,800 | ||
Property | 3,900 | ||
Identifiable intangible assets | 58,500 | ||
Goodwill | 63,200 | ||
Total assets acquired | 163,500 | ||
Accounts payable and accrued liabilities | 7,200 | ||
Deferred income taxes | 24,300 | ||
Net assets acquired | $ | 132,000 | |
Purchase price | $ | 132,800 | |
Reconciliation of fair value transferred: | |||
Working Capital Adjustments | (800 | ) | |
Total Consideration | $ | 132,000 |
June 30, | 2017 | 2016 | ||||||
U.S. inventories at average cost | $ | 373,984 | $ | 380,000 | ||||
Foreign inventories at average cost | 108,734 | 105,465 | ||||||
482,718 | 485,465 | |||||||
Less: Excess of average cost over LIFO cost for U.S. inventories | 137,573 | 147,244 | ||||||
Inventories on consolidated balance sheets | $ | 345,145 | $ | 338,221 |
Service Center Based Distribution | Fluid Power Businesses | Total | |||||||||
Balance at July 1, 2015 | $ | 253,477 | $ | 929 | $ | 254,406 | |||||
Goodwill acquired during the year | 18,683 | 3,285 | 21,968 | ||||||||
Impairment | (64,794 | ) | — | (64,794 | ) | ||||||
Other, primarily currency translation | (8,880 | ) | — | (8,880 | ) | ||||||
Balance at June 30, 2016 | 198,486 | 4,214 | 202,700 | ||||||||
Goodwill added during the year | 3,220 | 625 | 3,845 | ||||||||
Other, primarily currency translation | 34 | (444 | ) | (410 | ) | ||||||
Balance at June 30, 2017 | $ | 201,740 | $ | 4,395 | $ | 206,135 |
June 30, 2017 | Amount | Accumulated Amortization | Net Book Value | ||||||||
Finite-Lived Intangibles: | |||||||||||
Customer relationships | $ | 235,009 | $ | 102,414 | $ | 132,595 | |||||
Trade names | 43,873 | 19,295 | 24,578 | ||||||||
Vendor relationships | 14,152 | 9,141 | 5,011 | ||||||||
Non-competition agreements | 3,788 | 2,410 | 1,378 | ||||||||
Total Intangibles | $ | 296,822 | $ | 133,260 | $ | 163,562 |
June 30, 2016 | Amount | Accumulated Amortization | Net Book Value | ||||||||
Finite-Lived Intangibles: | |||||||||||
Customer relationships | $ | 239,132 | $ | 84,566 | $ | 154,566 | |||||
Trade names | 44,430 | 16,099 | 28,331 | ||||||||
Vendor relationships | 14,042 | 8,003 | 6,039 | ||||||||
Non-competition agreements | 4,700 | 2,396 | 2,304 | ||||||||
Total Intangibles | $ | 302,304 | $ | 111,064 | $ | 191,240 |
Fiscal Year | Aggregate Maturity | ||
2018 | $ | 4,919 | |
2019 | 6,484 | ||
2020 | 33,051 | ||
2021 | 141,802 | ||
2022 | 40,245 | ||
Thereafter | 65,481 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
U.S. | $ | 154,472 | $ | 139,960 | $ | 152,618 | |||||
Foreign | 12,494 | (60,982 | ) | 23,253 | |||||||
Income before income taxes | $ | 166,966 | $ | 78,978 | $ | 175,871 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Current: | |||||||||||
Federal | $ | 26,456 | $ | 45,226 | $ | 52,861 | |||||
State and local | 4,692 | 6,349 | 6,884 | ||||||||
Foreign | 4,760 | 4,407 | 5,603 | ||||||||
Total current | 35,908 | 55,982 | 65,348 | ||||||||
Deferred: | |||||||||||
Federal | 852 | 397 | (3,799 | ) | |||||||
State and local | 535 | (30 | ) | (153 | ) | ||||||
Foreign | (4,239 | ) | (6,948 | ) | (1,009 | ) | |||||
Total deferred | (2,852 | ) | (6,581 | ) | (4,961 | ) | |||||
Total | $ | 33,056 | $ | 49,401 | $ | 60,387 |
Year Ended June 30, | 2017 | 2016 | 2015 | |||||
Statutory income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Effects of: | ||||||||
State and local taxes | 2.8 | 5.2 | 2.5 | |||||
Worthless stock deduction | (13.9 | ) | — | — | ||||
Stock compensation | (1.4 | ) | — | — | ||||
Goodwill impairment | — | 27.1 | — | |||||
Foreign income taxes | (2.3 | ) | (3.0 | ) | (2.5 | ) | ||
Deductible dividend | (0.4 | ) | (0.9 | ) | (0.5 | ) | ||
Valuation allowance | 0.3 | 0.5 | 0.5 | |||||
Other, net | (0.3 | ) | (1.3 | ) | (0.7 | ) | ||
Effective income tax rate | 19.8 | % | 62.6 | % | 34.3 | % |
June 30, | 2017 | 2016 | |||||
Deferred tax assets: | |||||||
Compensation liabilities not currently deductible | $ | 26,873 | $ | 25,992 | |||
Other expenses and reserves not currently deductible | 11,601 | 11,650 | |||||
Goodwill and intangibles | 5,661 | 6,366 | |||||
Foreign tax credit (expiring in years 2025-2026) | 709 | 849 | |||||
Net operating loss carryforwards (expiring in years 2018-2037) | 5,729 | 4,960 | |||||
Other | 119 | 83 | |||||
Total deferred tax assets | 50,692 | 49,900 | |||||
Less: Valuation allowance | (1,831 | ) | (1,347 | ) | |||
Deferred tax assets, net of valuation allowance | 48,861 | 48,553 | |||||
Deferred tax liabilities: | |||||||
Inventories | (7,447 | ) | (4,785 | ) | |||
Goodwill and intangibles | (30,482 | ) | (33,353 | ) | |||
Depreciation and differences in property bases | (10,122 | ) | (9,892 | ) | |||
Total deferred tax liabilities | (48,051 | ) | (48,030 | ) | |||
Net deferred tax assets | $ | 810 | $ | 523 | |||
Net deferred tax assets are classified as follows: | |||||||
Deferred tax assets | $ | 8,985 | $ | 12,277 | |||
Other liabilities | (8,175 | ) | (11,754 | ) | |||
Net deferred tax assets | $ | 810 | $ | 523 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Unrecognized Income Tax Benefits at beginning of the year | $ | 2,915 | $ | 2,604 | $ | 2,364 | |||||
Current year tax positions | 574 | 539 | 472 | ||||||||
Prior year tax positions | 259 | — | — | ||||||||
Expirations of statutes of limitations | (189 | ) | (132 | ) | (160 | ) | |||||
Settlements | (26 | ) | (96 | ) | (72 | ) | |||||
Unrecognized Income Tax Benefits at end of year | $ | 3,533 | $ | 2,915 | $ | 2,604 |
Foreign currency translation adjustment | Unrealized gain (loss) on securities available for sale | Postemployment benefits | Total accumulated other comprehensive (loss) income | ||||||||||||
Balance at July 1, 2014 | $ | 989 | $ | 21 | $ | (2,625 | ) | $ | (1,615 | ) | |||||
Other comprehensive loss | (58,233 | ) | (25 | ) | (472 | ) | (58,730 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | 174 | 174 | |||||||||||
Net current-period other comprehensive loss | (58,233 | ) | (25 | ) | (298 | ) | (58,556 | ) | |||||||
Balance at June 30, 2015 | (57,244 | ) | (4 | ) | (2,923 | ) | (60,171 | ) | |||||||
Other comprehensive loss | (24,441 | ) | (34 | ) | (1,215 | ) | (25,690 | ) | |||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | 315 | 315 | |||||||||||
Net current-period other comprehensive loss | (24,441 | ) | (34 | ) | (900 | ) | (25,375 | ) | |||||||
Balance at June 30, 2016 | (81,685 | ) | (38 | ) | (3,823 | ) | (85,546 | ) | |||||||
Other comprehensive income | 2,238 | 59 | 1,239 | 3,536 | |||||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | — | — | 308 | 308 | |||||||||||
Net current-period other comprehensive income | 2,238 | 59 | 1,547 | 3,844 | |||||||||||
Balance at June 30, 2017 | $ | (79,447 | ) | $ | 21 | $ | (2,276 | ) | $ | (81,702 | ) |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||
Pre-Tax Amount | Tax Expense | Net Amount | Pre-Tax Amount | Tax (Benefit) Expense | Net Amount | Pre-Tax Amount | Tax (Benefit) Expense | Net Amount | |||||||||||||||||||||||||||
Foreign currency translation adjustments | $ | 2,238 | $ | — | $ | 2,238 | $ | (24,441 | ) | $ | — | $ | (24,441 | ) | $ | (58,233 | ) | $ | — | $ | (58,233 | ) | |||||||||||||
Postemployment benefits: | |||||||||||||||||||||||||||||||||||
Actuarial gain (loss) on remeasurement | 2,038 | 799 | 1,239 | (1,998 | ) | (783 | ) | (1,215 | ) | (776 | ) | (304 | ) | (472 | ) | ||||||||||||||||||||
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs | 506 | 198 | 308 | 518 | 203 | 315 | 286 | 112 | 174 | ||||||||||||||||||||||||||
Unrealized gain (loss) on investment securities available for sale | 91 | 32 | 59 | (52 | ) | (18 | ) | (34 | ) | (38 | ) | (13 | ) | (25 | ) | ||||||||||||||||||||
Other comprehensive income (loss) | $ | 4,873 | $ | 1,029 | $ | 3,844 | $ | (25,973 | ) | $ | (598 | ) | $ | (25,375 | ) | $ | (58,761 | ) | $ | (205 | ) | $ | (58,556 | ) |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Net Income | $ | 133,910 | $ | 29,577 | $ | 115,484 | |||||
Average Shares Outstanding: | |||||||||||
Weighted-average common shares outstanding for basic computation | 39,013 | 39,254 | 40,892 | ||||||||
Dilutive effect of potential common shares | 391 | 212 | 295 | ||||||||
Weighted-average common shares outstanding for dilutive computation | 39,404 | 39,466 | 41,187 | ||||||||
Net Income Per Share — Basic | $ | 3.43 | $ | 0.75 | $ | 2.82 | |||||
Net Income Per Share — Diluted | $ | 3.40 | $ | 0.75 | $ | 2.80 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
SARs and options | $ | 1,891 | $ | 1,543 | $ | 1,610 | |||||
Performance shares | 1,331 | 446 | 836 | ||||||||
Restricted stock and RSUs | 2,298 | 2,078 | 2,015 | ||||||||
Total compensation costs under award programs | $ | 5,520 | $ | 4,067 | $ | 4,461 |
June 30, | 2017 | Average Expected Period of Expected Recognition (Years) | |||
SARs and options | $ | 2,893 | 2.6 | ||
Performance shares | 3,910 | 1.7 | |||
Restricted stock and RSUs | 2,149 | 1.9 | |||
Total unrecognized compensation costs under award programs | $ | 8,952 | 2.0 |
2017 | 2016 | 2015 | ||||||
Expected life, in years | 4.8 | 4.4 | 4.7 | |||||
Risk free interest rate | 1.2 | % | 1.3 | % | 1.4 | % | ||
Dividend yield | 2.5 | % | 2.5 | % | 2.5 | % | ||
Volatility | 24.1 | % | 26.0 | % | 29.0 | % | ||
Per share fair value of SARs and stock options granted during the year | $7.97 | $6.79 | $9.53 |
Shares | Weighted-Average Exercise Price | |||||
Year Ended June 30, 2017 | ||||||
(Shares in thousands) | ||||||
Outstanding, beginning of year | 1,236 | $ | 37.69 | |||
Granted | 335 | 48.97 | ||||
Exercised | (343 | ) | 32.30 | |||
Forfeited | (10 | ) | 42.69 | |||
Outstanding, end of year | 1,218 | $ | 42.26 | |||
Exercisable at end of year | 585 | $ | 38.44 | |||
Expected to vest at end of year | 1,187 | $ | 42.14 |
Shares | Weighted-Average Grant-Date Fair Value | |||||
Year Ended June 30, 2017 | ||||||
(Shares in thousands) | ||||||
Nonvested, beginning of year | 37 | $ | 46.01 | |||
Awarded | 29 | 44.56 | ||||
Vested | (14 | ) | 50.39 | |||
Nonvested, end of year | 52 | $ | 43.99 |
Shares | Weighted-Average Grant-Date Fair Value | |||||
Year Ended June 30, 2017 | ||||||
(Share amounts in thousands) | ||||||
Nonvested, beginning of year | 118 | $ | 43.56 | |||
Granted | 47 | 52.91 | ||||
Forfeitures | (4 | ) | 44.27 | |||
Vested | (45 | ) | 44.69 | |||
Nonvested, end of year | 116 | $ | 46.91 |
Pension Benefits | Retiree Health Care Benefits | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Change in benefit obligation: | |||||||||||||||
Benefit obligation at beginning of the year | $ | 26,605 | $ | 29,994 | $ | 2,235 | $ | 2,144 | |||||||
Service cost | 126 | 91 | 29 | 22 | |||||||||||
Interest cost | 687 | 879 | 63 | 75 | |||||||||||
Plan participants’ contributions | — | — | 69 | 60 | |||||||||||
Benefits paid | (1,562 | ) | (5,555 | ) | (237 | ) | (229 | ) | |||||||
Amendments | — | — | (245 | ) | — | ||||||||||
Actuarial (gain) loss during year | (1,445 | ) | 1,196 | (230 | ) | 163 | |||||||||
Benefit obligation at end of year | $ | 24,411 | $ | 26,605 | $ | 1,684 | $ | 2,235 | |||||||
Change in plan assets: | |||||||||||||||
Fair value of plan assets at beginning of year | $ | 6,737 | $ | 7,185 | $ | — | $ | — | |||||||
Actual gain (loss) on plan assets | 578 | (149 | ) | — | — | ||||||||||
Employer contributions | 776 | 5,256 | 168 | 169 | |||||||||||
Plan participants’ contributions | — | — | 69 | 60 | |||||||||||
Benefits paid | (1,561 | ) | (5,555 | ) | (237 | ) | (229 | ) | |||||||
Fair value of plan assets at end of year | $ | 6,530 | $ | 6,737 | $ | — | $ | — | |||||||
Funded status at end of year | $ | (17,881 | ) | $ | (19,868 | ) | $ | (1,684 | ) | $ | (2,235 | ) |
Pension Benefits | Retiree Health Care Benefits | ||||||||||||||
June 30, | 2017 | 2016 | 2017 | 2016 | |||||||||||
Amounts recognized in the consolidated balance sheets: | |||||||||||||||
Other current liabilities | $ | 2,814 | $ | 741 | $ | 220 | $ | 220 | |||||||
Post-employment benefits | 15,067 | 19,127 | 1,464 | 2,015 | |||||||||||
Net amount recognized | $ | 17,881 | $ | 19,868 | $ | 1,684 | $ | 2,235 | |||||||
Amounts recognized in accumulated other comprehensive loss: | |||||||||||||||
Net actuarial (loss) gain | $ | (5,798 | ) | $ | (8,234 | ) | $ | 1,167 | $ | 1,119 | |||||
Prior service cost | (35 | ) | (121 | ) | 922 | 948 | |||||||||
Total amounts recognized in accumulated other comprehensive loss | $ | (5,833 | ) | $ | (8,355 | ) | $ | 2,089 | $ | 2,067 |
Pension Benefits | |||||||
June 30, | 2017 | 2016 | |||||
Projected benefit obligations | $ | 24,411 | $ | 26,605 | |||
Accumulated benefit obligations | 24,411 | 26,605 | |||||
Fair value of plan assets | 6,530 | 6,737 |
Pension Benefits | Retiree Health Care Benefits | ||||||||||||||||||||||
Year Ended June 30, | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | |||||||||||||||||
Service cost | $ | 126 | $ | 91 | $ | 97 | $ | 29 | $ | 22 | $ | 53 | |||||||||||
Interest cost | 687 | 879 | 896 | 63 | 75 | 95 | |||||||||||||||||
Expected return on plan assets | (460 | ) | (491 | ) | (495 | ) | — | — | — | ||||||||||||||
Recognized net actuarial loss (gain) | 872 | 913 | 559 | (181 | ) | (210 | ) | (87 | ) | ||||||||||||||
Amortization of prior service cost | 86 | 86 | 86 | (271 | ) | (271 | ) | (272 | ) | ||||||||||||||
Net periodic cost (benefits) | $ | 1,311 | $ | 1,478 | $ | 1,143 | $ | (360 | ) | $ | (384 | ) | $ | (211 | ) |
Pension Benefits | Retiree Health Care Benefits | ||||||||||
June 30, | 2017 | 2016 | 2017 | 2016 | |||||||
Assumptions used to determine benefit obligations at year end: | |||||||||||
Discount rate | 2.8 | % | 2.3 | % | 3.3 | % | 3.3 | % | |||
Assumptions used to determine net periodic benefit cost: | |||||||||||
Discount rate | 2.3 | % | 3.0 | % | 2.9 | % | 4.0 | % | |||
Expected return on plan assets | 7.0 | % | 7.0 | % | N/A | N/A |
One-Percentage Point | |||||||
Increase | Decrease | ||||||
Effect on total service and interest cost components of periodic expense | $ | 15 | $ | (12 | ) | ||
Effect on post-retirement benefit obligation | 159 | (135 | ) |
Target Allocation | Fair Value | ||||||||
2017 | 2016 | ||||||||
Asset Class: | |||||||||
Equity* securities (Level 1) | 40 – 70% | $ | 3,880 | $ | 3,843 | ||||
Debt securities (Level 2) | 20 – 50% | 2,538 | 2,759 | ||||||
Other (Level 1) | 0 – 20% | 112 | 135 | ||||||
Total | 100% | $ | 6,530 | $ | 6,737 |
During Fiscal Years | Pension Benefits | Retiree Health Care Benefits | |||||
2018 | $ | 3,200 | $ | 190 | |||
2019 | 3,700 | 150 | |||||
2020 | 3,800 | 130 | |||||
2021 | 1,300 | 120 | |||||
2022 | 1,300 | 110 | |||||
2023 through 2027 | 4,400 | 480 |
During Fiscal Years | |||
2018 | $ | 29,000 | |
2019 | 22,700 | ||
2020 | 15,300 | ||
2021 | 8,200 | ||
2022 | 5,300 | ||
Thereafter | 14,600 | ||
Total minimum lease payments | $ | 95,100 |
Service Center Based Distribution | Fluid Power Businesses | Total | |||||||||
Year Ended June 30, 2017 | |||||||||||
Net sales | $ | 2,119,904 | $ | 473,842 | $ | 2,593,746 | |||||
Operating income for reportable segments | 111,357 | 51,006 | 162,363 | ||||||||
Assets used in the business | 1,153,411 | 234,184 | 1,387,595 | ||||||||
Depreciation and amortization of property | 14,010 | 1,296 | 15,306 | ||||||||
Capital expenditures | 14,497 | 2,548 | 17,045 | ||||||||
Year Ended June 30, 2016 | |||||||||||
Net sales | $ | 2,087,041 | $ | 432,387 | $ | 2,519,428 | |||||
Operating income for reportable segments | 109,491 | 40,794 | 150,285 | ||||||||
Assets used in the business | 1,123,597 | 188,428 | 1,312,025 | ||||||||
Depreciation and amortization of property | 14,595 | 1,371 | 15,966 | ||||||||
Capital expenditures | 12,227 | 903 | 13,130 | ||||||||
Year Ended June 30, 2015 | |||||||||||
Net sales | $ | 2,254,768 | $ | 496,793 | $ | 2,751,561 | |||||
Operating income for reportable segments | 140,421 | 48,535 | 188,956 | ||||||||
Assets used in the business | 1,228,131 | 204,425 | 1,432,556 | ||||||||
Depreciation and amortization of property | 15,196 | 1,382 | 16,578 | ||||||||
Capital expenditures | 13,531 | 1,402 | 14,933 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Operating income for reportable segments | $ | 162,363 | $ | 150,285 | $ | 188,956 | |||||
Adjustments for: | |||||||||||
Intangible amortization — Service Center Based Distribution | 18,669 | 19,595 | 19,561 | ||||||||
Intangible amortization — Fluid Power Businesses | 5,702 | 5,985 | 6,236 | ||||||||
Goodwill Impairment — Service Center Based Distribution | — | 64,794 | — | ||||||||
Corporate and other income, net | (36,598 | ) | (28,890 | ) | (21,460 | ) | |||||
Total operating income | 174,590 | 88,801 | 184,619 | ||||||||
Interest expense, net | 8,541 | 8,763 | 7,869 | ||||||||
Other (income) expense, net | (917 | ) | 1,060 | 879 | |||||||
Income before income taxes | $ | 166,966 | $ | 78,978 | $ | 175,871 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Industrial | $ | 1,855,437 | $ | 1,836,484 | $ | 2,013,447 | |||||
Fluid power | 738,309 | 682,944 | 738,114 | ||||||||
Net sales | $ | 2,593,746 | $ | 2,519,428 | $ | 2,751,561 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Net Sales: | |||||||||||
United States | $ | 2,182,552 | $ | 2,117,485 | $ | 2,238,263 | |||||
Canada | 251,999 | 257,797 | 358,580 | ||||||||
Other Countries | 159,195 | 144,146 | 154,718 | ||||||||
Total | $ | 2,593,746 | $ | 2,519,428 | $ | 2,751,561 |
June 30, | 2017 | 2016 | 2015 | ||||||||
Long-Lived Assets: | |||||||||||
United States | $ | 207,126 | $ | 225,538 | $ | 217,597 | |||||
Canada | 57,947 | 66,304 | 76,565 | ||||||||
Other Countries | 6,558 | 7,163 | 9,113 | ||||||||
Total | $ | 271,631 | $ | 299,005 | $ | 303,275 |
Year Ended June 30, | 2017 | 2016 | 2015 | ||||||||
Unrealized gain on assets held in rabbi trust for a non-qualified deferred compensation plan | $ | (1,188 | ) | $ | (87 | ) | $ | (442 | ) | ||
Foreign currency transaction losses | 209 | 1,039 | 1,251 | ||||||||
Other, net | 62 | 108 | 70 | ||||||||
Total other (income) expense, net | $ | (917 | ) | $ | 1,060 | $ | 879 |
Per Common Share | |||||||||||||||||||||||
Net Sales | Gross Profit | Operating Income | Net Income | Net Income | Cash Dividend | ||||||||||||||||||
2017 | |||||||||||||||||||||||
First Quarter | $ | 624,848 | $ | 178,330 | $ | 43,218 | $ | 27,371 | $ | 0.70 | $ | 0.28 | |||||||||||
Second Quarter | 608,123 | 172,456 | 37,656 | 24,085 | 0.61 | 0.28 | |||||||||||||||||
Third Quarter | 679,304 | 190,802 | 45,467 | 29,494 | 0.75 | 0.29 | |||||||||||||||||
Fourth Quarter | 681,471 | 196,107 | 48,249 | 52,960 | 1.34 | 0.29 | |||||||||||||||||
$ | 2,593,746 | $ | 737,695 | $ | 174,590 | $ | 133,910 | $ | 3.40 | $ | 1.14 | ||||||||||||
2016 | |||||||||||||||||||||||
First Quarter | $ | 641,904 | $ | 181,012 | $ | 41,026 | $ | 24,291 | $ | 0.61 | $ | 0.27 | |||||||||||
Second Quarter | 610,346 | 173,167 | 38,362 | 23,947 | 0.61 | 0.27 | |||||||||||||||||
Third Quarter | 633,172 | 174,793 | (33,032 | ) | (44,728 | ) | (1.14 | ) | 0.28 | ||||||||||||||
Fourth Quarter | 634,006 | 178,450 | 42,445 | 26,067 | 0.66 | 0.28 | |||||||||||||||||
$ | 2,519,428 | $ | 707,422 | $ | 88,801 | $ | 29,577 | $ | 0.75 | $ | 1.10 | ||||||||||||
2015 | |||||||||||||||||||||||
First Quarter | $ | 702,325 | $ | 194,932 | $ | 46,165 | $ | 29,122 | $ | 0.70 | $ | 0.25 | |||||||||||
Second Quarter | 691,702 | 195,713 | 46,807 | 29,707 | 0.72 | 0.25 | |||||||||||||||||
Third Quarter | 679,994 | 187,363 | 43,772 | 28,610 | 0.70 | 0.27 | |||||||||||||||||
Fourth Quarter | 677,540 | 191,806 | 47,875 | 28,045 | 0.70 | 0.27 | |||||||||||||||||
$ | 2,751,561 | $ | 769,814 | $ | 184,619 | $ | 115,484 | $ | 2.80 | $ | 1.04 |
/s/ Neil A. Schrimsher | /s/ Mark O. Eisele | |
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 | 1,187,452 | $42.14 | * | |||||
Equity compensation plans not approved by security holders | — | — | — | |||||
Total | 1,187,452 | $42.14 | * |
* | The 2015 Long-Term Performance Plan was adopted to replace the 2011 Long-Term Performance Plan, the 2011 Long-Term Performance Plan was adopted to replace the 2007 Long-Term Performance Plan, and the 2007 Long-Term Performance Plan replaced the 1997 Long-Term Performance Plan. Stock options and stock appreciation rights remain outstanding under each of the 1997, 2007 and 2011 plans, but no new awards are made under those plans. The aggregate number of shares that remained available for awards under the 2015 Long-Term Performance Plan at June 30, 2017 was 2,021,407. |
• | Report of Independent Registered Public Accounting Firm | |
• | Statements of Consolidated Income for the Years Ended June 30, 2017, 2016, and 2015 | |
• | Statements of Consolidated Comprehensive Income for the Years Ended June 30, 2017, 2016, and 2015 | |
• | Consolidated Balance Sheets at June 30, 2017 and 2016 | |
• | Statements of Consolidated Cash Flows for the Years Ended June 30, 2017, 2016, and 2015 | |
• | Statements of Consolidated Shareholders' Equity For the Years Ended June 30, 2017, 2016, and 2015 | |
• | Notes to Consolidated Financial Statements for the Years Ended June 30, 2017, 2016, and 2015 | |
• | Supplementary Data: | |
• | Quarterly Operating Results |
Page No. | ||
Schedule II - Valuation and Qualifying Accounts: Pg. 70 |
* Asterisk indicates an executive compensation plan or arrangement. | |
Exhibit No. | Description |
3.1 | Amended and Restated Articles of Incorporation of Applied Industrial Technologies, Inc., as amended on October 25, 2005 (filed as Exhibit 3(a) to Applied's Form 10-Q for the quarter ended December 31, 2005, SEC File No. 1-2299, and incorporated here by reference). |
3.2 | Code of Regulations of Applied Industrial Technologies, Inc., as amended on October 19, 1999 (filed as Exhibit 3(b) to Applied's Form 10-Q for the quarter ended September 30, 1999, SEC File No. 1-2299, and incorporated here by reference). |
4.1 | Certificate of Merger of Bearings, Inc. (Ohio) and Bearings, Inc. (Delaware) filed with the Ohio Secretary of State on October 18, 1988, including an Agreement and Plan of Reorganization dated September 6, 1988 (filed as Exhibit 4(a) to Applied's Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). |
4.2 | Private Shelf Agreement dated as of November 27, 1996, as amended through December 23, 2015, between Applied and Prudential Investment Management, Inc. (assignee of The Prudential Insurance Company of America), conformed to show all amendments (filed as Exhibit 4.2 to Applied's Form 10-Q for the quarter ended December 31, 2015, SEC File No. 1-2299, and incorporated here by reference). |
4.3 | Request for Purchase dated May 30, 2014 and 3.19% Series C Notes dated July 1, 2014, under Private Shelf Agreement dated November 27, 1996, as most recently amended on February 4, 2013, between Applied Industrial Technologies, Inc. and Prudential Investment Management, Inc. (filed as Exhibit 10.1 to Applied’s Form 8-K dated July 1, 2014, SEC File No. 1-2299, and incorporated here by reference). |
4.4 | Request for Purchase dated October 22, 2014 and 3.21% Series D Notes dated October 30, 2014, under Private Shelf Agreement dated November 27, 1996, as amended, between Applied Industrial Technologies, Inc. and Prudential Investment Management, Inc. (filed as Exhibit 4.5 to Applied's Form 10-Q dated November 4, 2014, SEC File No. 1-2299, and incorporated here by reference). |
4.5 | Credit Agreement dated as of December 22, 2015, among Applied Industrial Technologies, Inc., KeyBank National Association as Agent, and various financial institutions (filed as Exhibit 10.1 to Applied's Form 8-K dated December 28, 2015, SEC File No. 1-2299, and incorporated here by reference). |
*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 24, 2017 under the caption “Director Compensation.” |
*10.2 | Deferred Compensation Plan for Non-Employee Directors (September 1, 2003 Restatement), the terms of which govern benefits vested as of December 31, 2004, for Peter A. Dorsman, an Applied director (filed as Exhibit 10(c) to Applied's Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference). |
*10.3 | Deferred Compensation Plan for Non-Employee Directors (Post-2004 Terms) (filed as Exhibit 10.2 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). |
*10.4 | Amendment to the Applied Industrial Technologies, Inc. Deferred Compensation Plan for Non-Employee Directors (Post-2004 Terms) (filed as Exhibit 10.1 to Applied’s Form 10-Q for the quarter ended March 31, 2014, SEC File No. 1-2299, and incorporated here by reference). |
*10.5 | Form of Director and Officer Indemnification Agreement entered into between Applied and each of its directors and executive officers (filed as Exhibit 10(g) to Applied's Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). |
*10.6 | 2007 Long-Term Performance Plan (filed as Exhibit 10 to Applied's Form 8-K dated October 23, 2007, SEC File No. 1-2299, and incorporated here by reference). |
*10.7 | Section 409A Amendment to the 2007 Long-Term Performance Plan (filed as Exhibit 10.5 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). |
*10.8 | 2011 Long-Term Performance Plan (filed as Appendix to Applied’s proxy statement for the annual meeting of shareholders held on October 25, 2011, SEC File No. 1-2299, and incorporated here by reference). |
*10.9 | 2015 Long-Term Performance Plan (filed as Appendix to Applied's proxy statement for the annual meeting of shareholders held on October 27, 2015, SEC File No. 1-2299, and incorporated here by reference). |
*10.10 | Non-Statutory Stock Option Award Terms and Conditions (Directors) (filed as Exhibit 10 to Applied's Form 8-K dated November 30, 2005, SEC File No. 1-2299, and incorporated here by reference). |
*10.11 | Restricted Stock Award Terms and Conditions (Directors) (filed as Exhibit 10.1 to Applied's Form 10-Q for the quarter ended March 31, 2012, SEC File No. 1-2299, and incorporated here by reference). |
*10.12 | Stock Appreciation Rights Award Terms and Conditions (Officers) (August 2016 revision) (filed as Exhibit 10.2 to Applied's Form 10-Q for the quarter ended September 30, 2016, SEC File No. 1-2299, and incorporated here by reference). |
*10.13 | Performance Shares Terms and Conditions (filed as Exhibit 10.4 to Applied's Form 10-Q for the quarter ended September 30, 2016, SEC File No. 1-2299, and incorporated here by reference). |
*10.14 | Restricted Stock Units Terms and Conditions (filed as Exhibit 10.3 to Applied's Form 10-Q for the quarter ended September 30, 2016, SEC File No. 1-2299, and incorporated here by reference). |
*10.15 | Management Incentive Plan General Terms (filed as Exhibit 10.1 to Applied's Form 10-Q for the quarter ended September 30, 2016, SEC File No. 1-2299, and incorporated here by reference). |
*10.16 | Key Executive Restoration Plan, as amended and restated, in which Applied's executive officers participate (filed as Exhibit 10.1 to Applied's Form 8-K dated August 16, 2013, SEC File No. 1-2299, and incorporated here by reference). |
*10.17 | Schedule of executive officer participants in the Key Executive Restoration Plan, as amended and restated (filed as Exhibit 10.19 to Applied's Form 10-K for the year ended June 30, 2016, SEC File No. 1-2299, and incorporated here by reference). |
*10.18 | Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) in which Todd A. Barlett, Fred D. Bauer, and Mark O. Eisele participate (filed as Exhibit 10.1 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). |
*10.19 | First Amendment to the Applied Industrial Technologies, Inc. Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) (filed as Exhibit 10.1 to Applied's Form 8-K dated December 22, 2011, SEC File No. 1-2299, and incorporated here by reference). |
*10.20 | Second Amendment to the Applied Industrial Technologies, Inc. Supplemental Executive Retirement Benefits Plan (Restated Post-2004 Terms) (filed as Exhibit 10.1 to Applied's Form 8-K dated October 22, 2012, SEC File No. 1-2299, and incorporated here by reference). |
*10.21 | Deferred Compensation Plan (September 1, 2003 Restatement), the terms of which govern benefits vested as of December 31, 2004, for Mark O. Eisele (filed as Exhibit 10(h) to Applied's Form 10-K for the year ended June 30, 2003, SEC File No. 1-2299, and incorporated here by reference). |
*10.22 | First Amendment to Deferred Compensation Plan (September 1, 2003 Restatement) (filed as Exhibit 10 to Applied's Form 10-Q for the quarter ended December 31, 2003, SEC File No. 1-2299, and incorporated here by reference). |
*10.23 | Deferred Compensation Plan (Post-2004 Terms) (filed as Exhibit 10.3 to Applied's Form 10-Q for the quarter ended December 31, 2008, SEC File No. 1-2299, and incorporated here by reference). |
*10.24 | Supplemental Defined Contribution Plan (January 1, 1997 Restatement) the terms of which govern benefits vested as of December 31, 2004, for certain executive officers (filed as Exhibit 10(m) to Applied’s Registration Statement on Form S-4 filed May 23, 1997, Registration No. 333-27801, and incorporated here by reference). |
*10.25 | First Amendment to Supplemental Defined Contribution Plan effective as of October 1, 2000 (filed as Exhibit 10(a) to Applied’s Form 10-Q for the quarter ended September 30, 2000, SEC File No. 1-2299, and incorporated here by reference). |
*10.26 | Second Amendment to Supplemental Defined Contribution Plan effective as of January 16, 2001 (filed as Exhibit 10(a) to Applied's Form 10-Q for the quarter ended March 31, 2001, SEC File No. 1-2299, and incorporated here by reference). |
*10.27 | Supplemental Defined Contribution Plan (Post-2004 Terms), restated effective as of January 1, 2017. |
*10.28 | Severance Agreement for Neil A. Schrimsher (filed as Exhibit 10.2 to Applied's Form 8-K dated October 31, 2011, SEC File No. 1-2299, and incorporated here by reference). |
*10.29 | Amendment to Severance Agreement for Neil A. Schrimsher (filed as Exhibit 10.2 to Applied's Form 8-K dated October 22, 2012, SEC File No. 1-2299, and incorporated here by reference). |
*10.30 | Change in Control Agreement for Neil A. Schrimsher (filed as Exhibit 10.3 to Applied's Form 8-K dated October 31, 2011, SEC File No. 1-2299, and incorporated here by reference). |
*10.31 | Form of Change in Control Agreement for each of Todd A. Barlett, Fred D. Bauer, and Mark O. Eisele (filed as Exhibit 99.1 to Applied's Form 8-K dated April 25, 2008, SEC File No. 1-2299, and incorporated here by reference). |
*10.32 | Form of Change in Control Agreement for executive officers newly hired since 2012 (filed as Exhibit 10.3 to Applied's Form 10-Q for the quarter ended September 30, 2013, SEC File No. 1-2299, and incorporated here by reference). |
*10.33 | A written description of Applied's Life and Accidental Death and Dismemberment Insurance for executive officers. |
*10.34 | A written description of Applied's Long-Term Disability Insurance for executive officers. |
*10.35 | A written description of Applied's Retiree Health Care Coverage for certain executive officers. |
21 | Applied’s subsidiaries at June 30, 2017. |
23 | Consent of Independent Registered Public Accounting Firm. |
24 | Powers of attorney. |
31 | Rule 13a-14(a)/15d-14(a) certifications. |
32 | Section 1350 certifications. |
95 | Mine safety and health disclosure. |
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 |
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, 2017 | ||||||||||||||||||||||
Reserve deducted from assets to which it applies — accounts receivable allowances | $ | 11,034 | $ | 2,071 | $ | (133 | ) | (A) | $ | 3,344 | (B) | $ | 9,628 | |||||||||
Year Ended June 30, 2016 | ||||||||||||||||||||||
Reserve deducted from assets to which it applies — accounts receivable allowances | $ | 10,621 | $ | 4,303 | $ | (46 | ) | (A) | $ | 3,844 | (B) | $ | 11,034 | |||||||||
Year Ended June 30, 2015 | ||||||||||||||||||||||
Reserve deducted from assets to which it applies — accounts receivable allowances | $ | 10,385 | $ | 2,597 | $ | 231 | (A) | $ | 2,592 | (B) | $ | 10,621 |
(A) | Amounts represent reserves for the return of merchandise by customers. |
(B) | Amounts represent uncollectible accounts charged off. |
/s/ Neil A. Schrimsher | /s/ Mark O. Eisele | |
Neil A. Schrimsher President & Chief Executive Officer | Mark O. Eisele Vice President-Chief Financial Officer & Treasurer | |
/s/ Christopher Macey | ||
Christopher Macey Corporate Controller (Principal Accounting Officer) |
* | * | |
Peter A. Dorsman, Director | L. Thomas Hiltz, Director | |
* | * | |
Edith Kelly-Green, Director | Dan P. Komnenovich, Director | |
* | ||
Robert J. Pagano, Jr., Director | Vincent K. Petrella, Director | |
/s/ Neil A. Schrimsher | ||
Joe A. Raver, Director | Neil A. Schrimsher, President & Chief Executive Officer and Director | |
* | * | |
Dr. Jerry Sue Thornton, Director | Peter C. Wallace, Director and Chairman | |
/s/ Fred D. Bauer |
Fred D. Bauer, as attorney in fact |
for persons indicated by “*” |
Article I | DEFINITIONS | 2 | ||
1.1 | Definitions | 2 | ||
1.2 | Construction | 5 | ||
Article II | ELIGIBILITY FOR PLAN PARTICIPATION | 6 | ||
Article III | SUPPLEMENTAL 401(k) CONTRIBUTIONS | 7 | ||
3.1 | Supplemental 401(k) Contribution Elections | 7 | ||
3.2 | Withholding of Supplemental 401(k) Contributions | 9 | ||
3.3 | Crediting of Supplemental 401(k) Contributions | 10 | ||
Article IV | ESTABLISHMENT AND ADMINISTRATION OF SUPPLEMENTAL 401(K) CONTRIBUTION ACCOUNTS | 11 | ||
4.1 | Establishment of Supplemental 401(k) Contribution Accounts | 11 | ||
4.2 | Adjustment of Supplemental 401(k) Contribution Accounts | 11 | ||
4.3 | Investment Elections for Supplemental 401(k) Contributions | 11 | ||
4.4 | Investment Change of Future Supplemental 401(k) Contributions | 12 | ||
4.5 | Election to Transfer Invested Past Supplemental 401(k) Contributions | 12 | ||
Article V | DISTRIBUTION | 14 | ||
5.1 | Default Distribution Upon Separation from Service | 14 | ||
5.2 | Optional Distribution Elections for Participants | 14 | ||
5.3 | Changes to Distribution Elections | 15 | ||
5.4 | Distributions to Specified Employees | 16 | ||
5.5 | No Acceleration | 17 | ||
5.6 | Payment of De Minimis Amounts | 17 | ||
5.7 | Payment upon Change in Control | 17 | ||
5.8 | Distributions Upon Death | 17 | ||
5.9 | Emergency Distribution | 17 | ||
5.10 | Taxes | 18 | ||
Article VI | BENEFICIARIES | |||
19 | ||||
Article VI | ADMINISTRATIVE PROVISIONS | 20 | ||
7.1 | Powers and Authorities of the Committee | 20 | ||
7.2 | Indemnification | 20 |
Article VIII | AMENDMENT AND TERMINATION | 22 | ||
Article IX | MISCELLANEOUS | 23 | ||
9.1 | Non-Alienation of Benefits | 23 | ||
9.2 | Payment of Benefits to Others | 23 | ||
9.3 | Plan Non-Contractual | 23 | ||
9.4 | Funding | 23 | ||
9.5 | Claims of Other Persons | 24 | ||
9.6 | Section 409A | 24 | ||
9.7 | Withholding | 25 | ||
9.8 | Department of Labor or Judicial Determinations | 25 | ||
9.9 | Severability | 26 | ||
9.10 | Governing Law | 26 | ||
Article X | CLAIMS PROCEDURES | 27 | ||
10.1 | Claim for Benefits | 27 | ||
10.2 | Notice of Denial | 27 | ||
10.3 | Review of Claim | 27 | ||
10.4 | Decision After Review | 28 | ||
10.5 | Legal Action | 28 | ||
10.6 | Discretion of the Committee | 28 | ||
Name | Jurisdiction of Incorporation or Organization | |
* Air-Hydraulic Systems, Inc. | Minnesota | |
* Air Draulics Engineering Co. | Tennessee | |
AIT Canada, ULC | Nova Scotia | |
AIT International Inc. | Ohio | |
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 | |
* Atlantic Fasteners Co., LLC | Ohio | |
BER International, Inc. | Barbados | |
* 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 | |
* DTS Fluid Power, LLC | Ohio | |
* ESI Acquisition Corporation (d/b/a Engineered Sales, Inc., ESI Power Hydraulics, and Applied Engineered Systems) | Ohio | |
* FluidTech, LLC | Ohio | |
* HUB Industrial Supply, LLC | Ohio | |
* HydroAir Hughes, LLC | Ohio | |
* HyQuip, LLC | Ohio | |
* Ira Pump & Supply Co., LLC | Ohio | |
* Knox Oil Field Supply, Inc. | Texas | |
* Power Systems, LLC | Ohio | |
* Rafael Benitez Carrillo Inc. | Puerto Rico | |
* Reliance Industrial Products USA, Ltd. | Colorado | |
* 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: 8/10/17 | By: /s/ Peter A. Dorsman |
Date: 8/10/17 | By: /s/ L. Thomas Hiltz |
Date: 8/10/2017 | By: /s/ Edith Kelly-Green |
Date: 8-10-2017 | By: /s/ D. P. Komnenovich |
Date: August 10, 2017 | By: /s/ Vincent K. Petrella |
Date: 8/10/2017 | By: /s/ Jerry Sue Thornton |
Date: August 10, 2017 | 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 18, 2017 | /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 18, 2017 | /s/ Mark O. Eisele | |
Mark O. Eisele | ||
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/ Mark O. Eisele | |
Neil A. Schrimsher President & Chief Executive Officer | Mark O. Eisele Vice President-Chief Financial Officer & Treasurer | |
Dated: August 18, 2017 |
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 | ($) Total Dollar Value of MSHA Assessments Proposed | (#) Total Number of Mining Related Fatalities | (yes/no) Received Notice of Pattern of Violations Under Section 104(e) | (yes/no) Received Notice of Potential to Have Pattern Under Section 104(e) | (#) Legal Actions Pending as of 6/30/2017 | (#) Legal Actions Initiated During Period | (#) Legal Actions Resolved During the Period |
(1) | (2) | (3) | (4) | (5) | (6) | |||||||
Louisville Plant Quarry & Mill #2500002 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | No | No | 0 | 0 | 1 |
(1) | United States mines. |
(2) | Total number of citations received from MSHA under section 104 of the Mine Act for health or safety standards that could significantly and substantially contribute to a serious injury if left unabated. |
(3) | Total number of orders under section 104(b) of the Mine Act, which represents a failure to abate a citation under section 104(a) within the period of time prescribed by MSHA. |
(4) | Total number of citations and orders for unwarrantable failure to comply with mandatory health or safety standards under section 104(d) of the Mine Act. |
(5) | Total number of flagrant violations under section 110(b)(2) of the Mine Act. |
(6) | Total number of imminent danger orders issued under section 107(a) of the Mine Act. |
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Aug. 11, 2017 |
Dec. 31, 2016 |
|
Document Information [Line Items] | |||
Entity Registrant Name | APPLIED INDUSTRIAL TECHNOLOGIES INC | ||
Entity Central Index Key | 0000109563 | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2017 | ||
Document Fiscal Year Focus | 2017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding (actual number) | 39,045,291 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 2,268,644,000 |
Statements of Consolidated Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Statement [Abstract] | |||
Net Sales | $ 2,593,746 | $ 2,519,428 | $ 2,751,561 |
Cost of Sales | 1,856,051 | 1,812,006 | 1,981,747 |
Gross Profit | 737,695 | 707,422 | 769,814 |
Selling, Distribution and Administrative, including depreciation | 563,105 | 553,827 | 585,195 |
Goodwill Impairment | 0 | 64,794 | 0 |
Operating Income | 174,590 | 88,801 | 184,619 |
Interest Expense | 8,831 | 9,004 | 8,121 |
Interest Income | (290) | (241) | (252) |
Other (Income) Expense, net | (917) | 1,060 | 879 |
Income Before Income Taxes | 166,966 | 78,978 | 175,871 |
Income Tax Expense | 33,056 | 49,401 | 60,387 |
Net Income | $ 133,910 | $ 29,577 | $ 115,484 |
Net Income Per Share — Basic | $ 3.43 | $ 0.75 | $ 2.82 |
Net Income Per Share — Diluted | $ 3.40 | $ 0.75 | $ 2.80 |
Statements of Consolidated Comprehensive Income - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statements of Comprehensive Income [Abstract] | |||
Net income per the statements of consolidated income | $ 133,910 | $ 29,577 | $ 115,484 |
Other comprehensive income (loss), before tax: | |||
Foreign currency translation adjustments | 2,238 | (24,441) | (58,233) |
Postemployment benefits: | |||
Actuarial gain (loss) on remeasurement | 2,038 | (1,998) | (776) |
Reclassification of actuarial losses and prior service cost into SD&A expense and included in net periodic pension costs | 506 | 518 | 286 |
Unrealized gain (loss) on investment securities available for sale | 91 | (52) | (38) |
Total other comprehensive income (loss), before tax | 4,873 | (25,973) | (58,761) |
Income tax expense (benefit) related to items of other comprehensive income (loss) | 1,029 | (598) | (205) |
Other comprehensive income (loss), net of tax | 3,844 | (25,375) | (58,556) |
Comprehensive income | $ 137,754 | $ 4,202 | $ 56,928 |
Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Current assets | ||
Accounts receivable, allowances | $ 9,628 | $ 11,034 |
Shareholders’ Equity | ||
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 2,500 | 2,500 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0 | $ 0 |
Common stock, shares authorized | 80,000 | 80,000 |
Common stock, shares issued | 54,213 | 54,213 |
Common Stock, Shares, Outstanding | 39,041 | 39,057 |
Treasury stock, shares | 15,172 | 15,156 |
Statements of Consolidated Shareholders' Equity Statements of Consolidated Shareholders' Equity (Parenthetical) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Common Stock, Dividends, Per Share, Cash Paid | $ 1.14 | $ 1.10 | $ 1.04 |
Business and Accounting Policies |
12 Months Ended |
---|---|
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | BUSINESS AND ACCOUNTING POLICIES Business Applied Industrial Technologies, Inc. and subsidiaries (the “Company” or “Applied”) is a leading distributor of bearings, power transmission products, fluid power components, and other industrial supplies, serving Maintenance Repair & Operations (MRO) and Original Equipment Manufacturer (OEM) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers storeroom services and inventory management solutions that provide added value to its customers. Although the Company does not generally manufacture the products it sells, it does assemble and repair certain products and systems. Consolidation The consolidated financial statements include the accounts of Applied Industrial Technologies, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. Foreign Currency The financial statements of the Company’s Canadian, Mexican, Australian and New Zealand subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss) in the statements of consolidated comprehensive income. Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other (income) expense, net. Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements. Cash and Cash Equivalents The Company considers all short-term, highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. Marketable Securities The primary marketable security investments of the Company include money market and mutual funds held in a rabbi trust for a non-qualified deferred compensation plan. These are included in other assets in the consolidated balance sheets, are classified as trading securities, and reported at fair value based on quoted market prices. Changes in the fair value of the investments during the period are recorded in other (income) expense, net in the statements of consolidated income. Concentration of Credit Risk The Company has a broad customer base representing many diverse industries across North America, Australia, New Zealand, and Singapore. As such, the Company does not believe that a significant concentration of credit risk exists in its accounts receivable. The Company’s cash and cash equivalents consist of deposits with commercial banks and regulated non-bank subsidiaries. While Applied monitors the creditworthiness of these institutions, a crisis in the financial systems could limit access to funds and/or result in the loss of principal. The terms of these deposits and investments provide that all monies are available to the Company upon demand. Allowances for Doubtful Accounts The Company evaluates the collectibility of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is adjusted based on recent trends of customers and industries estimated to be greater credit risks, trends within the entire customer pool, and changes in the overall aging of accounts receivable. Accounts are written off against the allowance when it becomes evident collection will not occur. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts. Inventories Inventories are valued at the average cost method, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. The Company adopted the link chain dollar value LIFO method of accounting for U.S. inventories in fiscal 1974. At June 30, 2017, approximately 22.5% of the Company’s domestic inventory dollars relate to LIFO layers added in the 1970s. The Company maintains five LIFO pools based on the following product groupings: bearings, power transmission products, rubber products, fluid power products and other products. LIFO layers and/or liquidations are determined consistently year-to-year. The Company evaluates the recoverability of its slow moving and inactive inventories at least quarterly. The Company estimates the recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the physical condition of the inventory, as well as assumptions regarding future demand. The Company’s ability to recover its cost for slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand, and relationships with suppliers. Historically, the Company’s inventories have demonstrated long shelf lives, are not highly susceptible to obsolescence, and, in certain instances, can be eligible for return under supplier return programs. Supplier Purchasing Programs The Company enters into agreements with certain suppliers providing inventory purchase incentives. The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s fiscal year end or the supplier’s year end; however, program length and ending dates can vary. Incentives are received in the form of cash or credits against purchases upon attainment of specified purchase volumes and are received either monthly, quarterly or annually. The incentives are generally a specified percentage of the Company’s net purchases based upon achieving specific purchasing volume levels. These percentages can increase or decrease based on changes in the volume of purchases. The Company accrues for the receipt of these inventory purchase incentives based upon cumulative purchases of inventory. The percentage level utilized is based upon the estimated total volume of purchases expected during the life of the program. Supplier programs are analyzed each quarter to determine the appropriateness of the amount of purchase incentives accrued. Upon program completion, differences between estimates and actual incentives subsequently received have not been material. Benefits under these supplier purchasing programs are recognized under the Company’s inventory accounting methods as a reduction of cost of sales when the inventories representing these purchases are recorded as cost of sales. Accrued incentives expected to be settled as a credit against future purchases are reported on the consolidated balance sheet as an offset to amounts due to the related supplier. Property and Related Depreciation and Amortization Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Buildings, building improvements and leasehold improvements are depreciated over ten to thirty years or the life of the lease if a shorter period, and equipment is depreciated over three to ten years. The Company capitalizes internal use software development costs in accordance with guidance on accounting for costs of computer software developed or obtained for internal use. Amortization of software begins when it is ready for its intended use, and is computed on a straight-line basis over the estimated useful life of the software, generally not to exceed twelve years. Capitalized software and hardware costs are classified as property on the consolidated balance sheets. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the recorded value cannot be recovered from undiscounted future cash flows. Impairment losses, if any, would be measured based upon the difference between the carrying amount and the fair value of the assets. Goodwill and Intangible Assets Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized. Goodwill is reviewed for impairment annually as of January 1 or whenever changes in conditions indicate an evaluation should be completed. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The Company utilizes discounted cash flow models and market multiples for comparable businesses to determine the fair value of reporting units. Evaluating impairment requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of the business, and determination of an appropriate discount rate. While the Company uses available information to prepare the estimates and evaluations, actual results could differ significantly. The Company recognizes acquired identifiable intangible assets such as customer relationships, trade names, vendor relationships, and non-competition agreements apart from goodwill. Customer relationship identifiable intangibles are amortized using the sum-of-the-years-digits method over estimated useful lives consistent with assumptions used in the determination of their value. Amortization of all other finite-lived identifiable intangible assets is computed using the straight-line method over the estimated period of benefit. Amortization of identifiable intangible assets is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Identifiable intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable. Identifiable intangible assets with indefinite lives are reviewed for impairment on an annual basis or whenever changes in conditions indicate an evaluation should be completed. The Company does not currently have any indefinite-lived identifiable intangible assets. Self-Insurance Liabilities The Company maintains business insurance programs with significant self-insured retention covering workers’ compensation, business, automobile, general product liability and other claims. The Company accrues estimated losses including those incurred but not reported using actuarial calculations, models and assumptions based on historical loss experience. The Company also maintains a self-insured health benefits plan which provides medical benefits to U.S. based employees electing coverage under the plan. The Company estimates its reserve for all unpaid medical claims, including those incurred but not reported, based on historical experience, adjusted as necessary based upon management’s reasoned judgment. Revenue Recognition Sales are recognized when there is evidence of an arrangement, the sales price is fixed, collectibility is reasonably assured and the product’s title and risk of loss is transferred to the customer. Typically, these conditions are met when the product is shipped to the customer. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in net sales. The Company reports its sales net of actual sales returns and the amount of reserves established for anticipated sales returns based on historical rates. Sales tax collected from customers is excluded from net sales in the accompanying statements of consolidated income. Shipping and Handling Costs The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Internal delivery costs in selling, distribution and administrative expenses were approximately $20,060, $21,480 and $24,430 for the fiscal years ended June 30, 2017, 2016 and 2015, respectively. Income Taxes Income taxes are determined based upon income and expenses recorded for financial reporting purposes. Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws. Uncertain tax positions meeting a more-likely-than-not recognition threshold are recognized in accordance with the Income Taxes topic of the ASC (Accounting Standards Codification). The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in the provision for income taxes. Share-Based Compensation Share-based compensation represents the cost related to share-based awards granted to employees under the 2015 Long-Term Performance Plan, the 2011 Long-Term Performance Plan, or the 2007 Long-Term Performance Plan. The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service period. Non-qualified stock appreciation rights (SARs) and stock options are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. SARs and stock option awards generally vest over four years of continuous service and have ten-year contractual terms. The fair value of restricted stock awards, restricted stock units (RSUs), and performance shares are based on the closing market price of Company common stock on the grant date. Treasury Shares Shares of common stock repurchased by the Company are recorded at cost as treasury shares and result in a reduction of shareholders’ equity in the consolidated balance sheets. The Company uses the weighted-average cost method for determining the cost of shares reissued. The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital. Changes in Accounting Principle Share-based Payment Awards In March 2016, the FASB issued its final standard on simplifying the accounting for share-based payment awards. This standard, issued as ASU 2016-09, simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification on the statement of cash flows, and accounting for forfeitures. This update is effective for annual and interim financial statement periods beginning after December 15, 2016, with early adoption permitted. The Company early adopted ASU 2016-09 in the first quarter of fiscal 2017. The new standard requires prospective recognition of excess tax benefits and deficiencies resulting from share-based compensation awards vesting and exercises be recognized in the income statement. Previously, these amounts were recognized in additional paid-in capital. Net excess tax benefits of $2,403 for the year ended June 30, 2017, were recognized as a reduction of income tax expense. In addition, ASU 2016-09 requires excess tax benefits and deficiencies to be prospectively excluded from the assumed future proceeds in the calculation of diluted shares, resulting in an insignificant increase in diluted weighted average shares outstanding for year ended June 30, 2017, which did not have a material impact on earnings per share. The Company has elected to continue to estimate the number of share-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur. The standard requires that excess tax benefits from share-based compensation awards be reported as operating activities in the consolidated statements of cash flows. Previously, these cash flows were included in financing activities. We have elected to apply this change on a prospective basis, resulting in an increase in net cash provided by operating activities and net cash used in financing activities of $2,403 for the year ended June 30, 2017. ASU 2016-09 requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statements of cash flows. Previously, these cash flows were included in operating activities. This change was required to be applied on a retrospective basis. As such, the consolidated statements of cash flows for the prior periods were revised. This change resulted in an increase in net cash provided by operating activities and in net cash used in financing activities of $1,022 and $2,469 for the years ended June 30, 2016 and 2015, respectively. Debt Issue Costs In April 2015, the FASB issued its final standard on simplifying the presentation of debt issue costs. This standard, issued as ASU 2015-03, requires that all costs incurred to issue debt be presented in the balance sheet as a direct reduction from the carrying value of the debt, rather than as an asset. This update is effective for annual financial statement periods beginning after December 15, 2015, and interim periods within those fiscal years. As required, the Company adopted ASU 2015-03 in the first quarter of fiscal 2017 and has applied the new standard retrospectively. The retrospective adoption of ASU 2015-03 resulted in the reclassification as of June 30, 2016 of unamortized debt issue costs of $105 from other current assets to a reduction of current portion of long-term debt and $399 from other assets to a reduction of long-term debt on the Company's consolidated balance sheets. Measurement-period Adjustments for Business Combinations In September 2015, the FASB issued its final standard on simplifying the accounting for measurement-period adjustments for business combinations. This standard, issued as ASU 2015-16, requires that an entity that is the acquirer in a business combination that identifies adjustments to provisional amounts during the measurement period to recognize those adjustments in the reporting period in which the amounts are determined. This update further requires that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The update is effective for annual and interim financial statement periods beginning after December 15, 2015, and is applied prospectively to adjustments to provisional amounts that occur after the effective date of this update, with early adoption permitted. The Company adopted ASU 2015-16 in the first quarter of fiscal 2017. The adoption of this update did not have a material impact on the financial statements of the Company. New Accounting Pronouncements In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as ASU 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that "an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services." In August 2015, the FASB issued ASU 2015-14 to delay the effective date of ASU 2014-09 by one year. In accordance with the delay, the update is effective for financial statement periods beginning after December 15, 2017 and may be adopted either retrospectively or on a modified retrospective basis. Early adoption is permitted, but not before financial statement periods beginning after December 15, 2016. In March 2016 the FASB issued ASU 2016-08 and ASU 2016-10, and in May 2016 the FASB issued ASU 2016-12, which clarify the guidance in ASU 2014-09 but do not change the core principle of the revenue recognition model. The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes, and financial statement disclosures. We are completing an analysis of revenue streams at each of the business units and are evaluating the impact the new standard may have on revenue recognition. The Company primarily sells purchased products and recognizes revenue at point of sale or delivery and this is not expected to change under the new standard. Preliminarily, the Company plans to use the modified retrospective method of adoption, and based on initial reviews, the standard is not expected to have a material impact on the Company's consolidated financial statements. We do anticipate expanded disclosures on revenue in order to comply with the new ASU. The Company will continue to evaluate the impacts of the adoption of the standard and the preliminary assessments are subject to change. In July 2015, the FASB issued its final standard on simplifying the measurement of inventory. This standard, issued as ASU 2015-11, specifies that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new standard does not apply to inventory that is measured using LIFO; therefore, it is not applicable to the Company's U.S. inventory values, but does apply to the Company's foreign inventories which are valued using the average cost method. The update is effective for financial statement periods beginning after December 15, 2016, with earlier application permitted. The Company will adopt this standard when it becomes effective in the first quarter of fiscal 2018, and it is not expected to have a material impact on the Company's financial statements and related disclosures. In February 2016, the FASB issued its final standard on accounting for leases. This standard, issued as ASU 2016-02, requires that an entity that is a lessee recognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements. The core principle of this update is that a "lessee should recognize the assets and liabilities that arise from leases." This update is effective for financial statement periods beginning after December 15, 2018, with earlier application permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In August 2016, the FASB issued its final standard on the classification of certain cash receipts and cash payments within the statement of cash flows. This standard, issued as ASU 2016-15, makes a number of changes meant to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. This update is effective for annual and interim financial statement periods beginning after December 15, 2018, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In October 2016, the FASB issued its final standard on the income tax consequences of intra-entity transfers of assets other than inventory. This standard, issued as ASU 2016-16, requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This update is effective for annual and interim financial statement periods beginning after December 15, 2017, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In January 2017, the FASB issued its final standard on simplifying the test for goodwill impairment. This standard, issued as ASU 2017-04, eliminates step 2 from the goodwill impairment test and instead requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This update is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. Upon adoption, the Company will apply this guidance prospectively to its annual and interim goodwill impairment tests and disclose the change in accounting principle. In March 2017, the FASB issued its final standard on improving the presentation of net periodic pension and postretirement benefit costs. This standard, issued as ASU 2017-07, requires that an employer report the service cost component for defined benefit plans and postretirement plans in the same line item in the income statement as other compensation costs arising from services rendered by the employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This update is effective for annual financial statement periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period. The Company has decided to early adopt this standard as of the beginning of fiscal 2018, and will apply the guidance retrospectively to all periods presented. The impact of the adoption of this guidance will result in the reclassification of the other components of net benefit cost from selling, distribution, and administrative expense to other (income) expense, net in the statements of consolidated income, resulting in an increase to operating income. There is no impact to income before income taxes or net income, so therefore no impact to net income per share. The amounts reclassified would result in an increase in operating income of $796, $981 and $782 for the years ended June 30, 2017, June 30, 2016 and June 30, 2015, respectively. In May 2017, the FASB issued its final standard on scope of modification accounting. This standard, issued as 2017-09, provides guidance about which change to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This update is effective for annual and interim financial statement periods beginning after December 15, 2017, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. |
Business Combinations |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS The operating results of all acquired entities are included within the consolidated operating results of the Company from the date of each respective acquisition. Fiscal 2017 Acquisition On March 3, 2017, the Company acquired substantially all of the net assets of Sentinel Fluid Controls ("Sentinel"), a distributor of hydraulic and lubrication components, systems and solutions operating from four locations - Toledo, OH, New Berlin, WI, Valparaiso, IN, and Indianapolis, IN. Sentinel is included in the Fluid Power Businesses segment. The purchase price for the acquisition was $3,755, net tangible assets acquired were $3,130, and goodwill was $625 based upon estimated fair values at the acquisition date. The purchase price includes $982 of acquisition holdback payments, of which $175 was paid during the year ended June 30, 2017. The remaining balance of $807 is included in other current liabilities and other liabilities on the consolidated balance sheets, which will be paid plus interest at various times in the future. The Company funded the amount paid for the acquisition at closing using available cash. The acquisition price and the results of operations for the acquired entity are not material in relation to the Company's consolidated financial statements. Fiscal 2016 Acquisitions On June 14, 2016, the Company acquired 100% of the outstanding stock of Seals Unlimited ("Seals"), a distributor of sealing, fastener, and hose products located in Burlington, Ontario. On January 4, 2016, the Company acquired substantially all of the net assets of HUB Industrial Supply ("HUB"), a distributor of consumable industrial products operating from three locations - Lake City, FL, Indianapolis, IN, and Las Vegas, NV. On August 3, 2015, the Company acquired substantially all of the net assets of Atlantic Fasteners Co., Inc. ("Atlantic Fasteners"), a distributor of C-Class consumables including industrial fasteners and related industrial supplies located in Agawam, MA. Seals, HUB, and Atlantic Fasteners are all included in the Service Center Based Distribution segment. On October 1, 2015, the Company acquired substantially all of the net assets of S.G. Morris Co. ("SGM"). SGM, headquartered in Cleveland, OH, is a distributor of hydraulic components throughout Ohio, Western Pennsylvania and West Virginia and is included in the Fluid Power Businesses segment. The total combined consideration for these acquisitions was approximately $65,900, net tangible assets acquired were $22,700, and intangibles including goodwill were $43,200 based upon estimated fair values at the acquisition dates. The total combined consideration includes $3,300 of acquisition holdback payments, of which $1,250 was paid during the year ended June 30, 2017. The remaining balance of $2,050 is included in other liabilities on the consolidated balance sheets, which will be paid plus interest in October 2018. The Company funded the amounts paid for the acquisitions at closing using available cash and borrowings under the revolving credit facility at variable interest rates. The acquisition prices and the results of operations for the acquired entities are not material in relation to the Company's consolidated financial statements. Knox Acquisition On July 1, 2014, the Company acquired 100% of the outstanding stock of Knox Oil Field Supply Inc. (“Knox”), headquartered in San Angelo, Texas, for total consideration of $132,000, including cash paid of $118,000 at closing. The primary reason for the acquisition of Knox was to complement and expand the Company’s capabilities to serve the upstream oil and gas industry in the United States. As a distributor of oilfield supplies and related services, this business is included in the Service Center Based Distribution Segment. The Company funded the acquisition by drawing $120,000 from the previously uncommitted shelf facility with Prudential Investment Management at a fixed interest rate of 3.19% with an average seven year life. The remaining $14,000 purchase price was to be paid as acquisition holdback payments in three payments with interest at a fixed rate of 1.50% per annum; $7,100 was paid during fiscal 2016, and $7,200 was paid during fiscal 2017, extinguishing the liability. The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of Knox based on their estimated fair values at the acquisition date:
None of the goodwill acquired is expected to be deductible for income tax purposes. The goodwill recognized was attributable primarily to expected synergies and other benefits that the Company believed would result from the acquisition of Knox. Other Fiscal 2015 Acquisitions Other acquisitions during fiscal 2015 included the acquisition of substantially all of the net assets of Rodamientos y Derivados del Norte S.A. de C.V., a Mexican distributor of bearings and power transmission products and related products, and Great Southern Bearings / Northam Bearings, a Western Australia distributor of bearings and power transmission products on July 1, 2014 as well as Ira Pump and Supply Inc., a Texas distributor of oilfield pumps and supplies on November 3, 2014. These companies are included in the Service Center Based Distribution Segment. The total combined consideration for these acquisitions was approximately $54,900. Net tangible assets acquired were $21,000 and intangibles including goodwill were $33,900, based upon estimated fair values at the acquisition date. The Company funded these acquisitions from borrowings under our existing debt facilities. Acquisition holdback payments totaled $6,900 for these acquisitions, of which $340 remains to be paid in July 2017 and is included in other current liabilities on the consolidated balance sheets. The results of operations for the Mexican, Australian, and Ira Pump acquisitions are not material for any period presented. Holdback Liabilities for Acquisitions Acquisition holdback payments of approximately $672, $2,384, $75 and $75 will be made in fiscal 2018, 2019, 2020 and 2024, respectively. The related liabilities for these payments are recorded in the consolidated balance sheets in other current liabilities for the amounts due in fiscal year 2018 and other liabilities for the amounts due in fiscal years 2019 through 2024. |
Inventories |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | INVENTORIES Inventories consist of the following:
In fiscal 2017, reductions in U.S. inventories, primarily in the bearings pool which included the scrapping of approximately $6,000 of product, resulted in liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years. The overall impact of LIFO layer liquidations increased gross profit by $9,414 and $2,100 in fiscal 2017 and fiscal 2016, respectively. There were no LIFO layer liquidations in fiscal 2015. |
Goodwill and Intangibles |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GOODWILL AND INTANGIBLES | GOODWILL AND INTANGIBLES The changes in the carrying amount of goodwill for both the Service Center Based Distribution Segment and the Fluid Power Businesses segment for the years ended June 30, 2017 and 2016 are as follows:
During the first quarter of fiscal 2017, the Company recorded an adjustment to the preliminary estimated fair value of intangible assets related to the HUB acquisition. The fair values of the customer relationships and trade names intangible assets were decreased by $2,636 and $584, respectively, with a corresponding total increase to goodwill of $3,220. The changes to the preliminary estimated fair values resulted in a decrease to amortization expense of $156 during fiscal 2017, which is recorded in selling, distribution and administrative expense on the statements of consolidated income. On July 1, 2016, the Company enacted a change in its management reporting structure which changed the composition of the Canada service center reporting unit. This triggering event required the Company to perform an interim goodwill impairment test for the Canada service center reporting unit. The Company performed step one of the goodwill impairment test for the Canada service center reporting unit as of July 1, 2016 and determined that the reporting unit had excess fair value of approximately $8,000 or 5% when compared to its carrying amount of approximately $163,000. In conjunction with this management change, $2,628 of goodwill was reallocated from the Canada service center reporting unit to the U.S. service center reporting unit based on the relative fair value as of July 1, 2016. The Company has six (6) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2017. The Company concluded that all of the reporting units’ fair value exceeded their carrying amounts by at least 20% as of January 1, 2017. The fair values of the reporting units in accordance with the goodwill impairment test were determined using the Income and Market approaches. The Income approach employs the discounted cash flow method reflecting projected cash flows expected to be generated by market participants and then adjusted for time value of money factors. The Market approach utilizes an analysis of comparable publicly traded companies. The Company had seven (7) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2016. The Company concluded that five (5) of the reporting units’ fair value substantially exceeded their carrying amounts. The carrying value for two (2) reporting units (Canada service center and Australia/New Zealand service center) exceeded the fair value, indicating there may be goodwill impairment. The fair values of the reporting units in accordance with step one of the goodwill impairment test were determined using the Income and Market approaches. Step two of the goodwill impairment test compares the fair value of the reporting unit goodwill with the carrying amount of goodwill. The implied fair value of goodwill is determined in the same manner as in a business combination. The fair value of the reporting unit from step one is allocated to all of the assets and liabilities of the reporting unit, including unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. Step two of the goodwill impairment test for the Canada service center reporting unit was completed in the third quarter of fiscal 2016. The analysis resulted in a goodwill impairment of $56,022 for the Canada service center reporting unit. The non-cash impairment charge was the result of the overall decline in the industrial economy in Canada coupled with the substantial and sustained decline in the oil and gas sector during calendar year 2015. This led to reduced spending by customers and reduced revenue expectations. The uncertainty regarding the oil and gas industries and overall industrial economy in Canada also led the reporting unit to reduce expectations. Step two of the goodwill impairment test for the Australia/New Zealand reporting unit was completed in the third quarter of fiscal 2016. The analysis concluded that all of the Australia/New Zealand reporting unit’s goodwill was impaired, and therefore the Company recorded a non-cash impairment expense of $8,772 in the third quarter of fiscal 2016. The impairment charge was primarily the result of the decline in the mining and extraction industries in Australia, reduced spending by customers, and the effects of reduced revenue expectations. The techniques used in the Company's impairment tests have incorporated a number of assumptions that the Company believes to be reasonable and to reflect known market conditions at the measurement dates. Assumptions in estimating future cash flows are subject to a degree of judgment. The Company makes all efforts to forecast future cash flows as accurately as possible with the information available at the measurement date. The Company evaluates the appropriateness of its assumptions and overall forecasts by comparing projected results of upcoming years with actual results of preceding years. Key Level 3 based assumptions relate to pricing trends, inventory costs, customer demand, and revenue growth. A number of benchmarks from independent industry and other economic publications were also used. Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where additional impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the fair values of its reporting units have fallen below their carrying values. At June 30, 2017 and 2016, accumulated goodwill impairment losses subsequent to fiscal year 2002 totaled $64,794 related to the Service Center Based Distribution segment and $36,605 related to the Fluid Power Businesses segment. The Company's identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:
Amounts include the impact of foreign currency translation. Fully amortized amounts are written off. Due to continued softness in the upstream oil and gas industry, management also assessed long-lived intangible assets related to the Reliance asset groups for impairment during the first and third quarters of fiscal 2017. For the assessment in the third quarter of fiscal 2017, the sum of the undiscounted cash flows exceeded the carrying values of the Reliance U.S. and Reliance Canada asset groups of $15,657 and $80,228, respectively, by 149% and 13%, respectively, therefore, no impairment was recognized. Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse market conditions could result in the recognition of impairment if the Company determines that the fair values of its intangible assets have fallen below their carrying values. Amortization of identifiable intangibles totaled $24,371, $25,580 and $25,797 in fiscal 2017, 2016 and 2015, respectively, and is included in selling, distribution and administrative expenses in the statements of consolidated income. Future amortization expense based on the Company’s identifiable intangible assets as of June 30, 2017 is estimated to be $22,500 for 2018, $20,700 for 2019, $18,900 for 2020, $17,400 for 2021 and $15,100 for 2022. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
DEBT | DEBT Revolving Credit Facility & Term Loan In December 2015, the Company entered into a five-year credit facility with a group of banks expiring in December 2020. This agreement provides for a $125,000 unsecured term loan and a $250,000 unsecured revolving credit facility. Fees on this facility range from 0.09% to 0.175% per year based upon the Company's leverage ratio at each quarter end. Borrowings under this agreement carry variable interest rates tied to either LIBOR or prime at the Company’s discretion. At June 30, 2017 and June 30, 2016, the Company had $120,313 and $123,438, respectively, outstanding under the term loan. The Company had no outstanding balance under the revolver as of June 30, 2017 and $33,000 outstanding as of June 30, 2016. Unused lines under this facility, net of outstanding letters of credit of $2,441 and $2,707 to secure certain insurance obligations, totaled $247,559 and $214,293 at June 30, 2017 and June 30, 2016, respectively, and are available to fund future acquisitions or other capital and operating requirements. The interest rate on the term loan was 2.25% as of June 30, 2017 and 1.5% as of June 30, 2016. The weighted-average interest rate on the revolving credit facility outstanding was 1.44% as of June 30, 2016. Additionally, the Company had letters of credit outstanding with a separate bank, not associated with the revolving credit agreement, in the amount of $2,698 as of June 30, 2017 and June 30, 2016, respectively, in order to secure certain insurance obligations. Other Long-Term Borrowings At June 30, 2017 and June 30, 2016, the Company had borrowings outstanding under its unsecured shelf facility agreement with Prudential Investment Management of $170,000. The "Series C" notes have a principal amount of $120,000 and carry a fixed interest rate of 3.19%, and are due in equal principal payments in July 2020, 2021, and 2022. The "Series D" notes have a principal amount of $50,000 and carry a fixed interest rate of 3.21%, and are due in equal principal payments in October 2019 and 2023. As of June 30, 2017, $50,000 in additional financing was available under this facility. In April 2014 the Company assumed $2,359 of debt as a part of the headquarters facility acquisition. The 1.5% fixed interest rate note is held by the State of Ohio Development Services Agency, maturing in May 2024. At June 30, 2017 and 2016, $1,669 and $1,896 was outstanding, respectively. Unamortized debt issue costs of $105 are included as a reduction of current portion of long-term debt on the consolidated balance sheets as of June 30, 2017 and June 30, 2016. Unamortized debt issue costs of $294 and $399 are included as a reduction of long-term debt on the consolidated balance sheets as of June 30, 2017 and June 30, 2016, respectively. The table below summarizes the aggregate maturities of amounts outstanding under long-term borrowing arrangements for each of the next five years:
Covenants The revolving credit facility, the term loan agreement, and the unsecured shelf facility contain restrictive covenants regarding liquidity, net worth, financial ratios, and other covenants. At June 30, 2017, the most restrictive of these covenants required that the Company have net indebtedness less than 3.25 times consolidated income before, interest, taxes, depreciation and amortization. The Company was in compliance with all financial covenants at June 30, 2017. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Marketable securities measured at fair value at June 30, 2017 and June 30, 2016 totaled $10,481 and $9,097, respectively. The majority of these marketable securities are held in a rabbi trust for a non-qualified deferred compensation plan. The marketable securities are included in other assets on the consolidated balance sheets and their fair values were valued using quoted market prices (Level 1 in the fair value hierarchy). As of June 30, 2017, the carrying value of the Company's fixed interest rate debt outstanding under its unsecured shelf facility agreement with Prudential Investment Management approximates fair value (Level 2 in the fair value hierarchy). The revolving credit facility and the term loan contain variable interest rates and their carrying values approximate fair value (Level 2 in the fair value hierarchy). |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INCOME TAXES | INCOME TAXES Income Before Income Taxes The components of income before income taxes are as follows:
Provision The provision (benefit) for income taxes consists of:
During the fourth quarter of fiscal 2017, the Company recorded a net tax benefit of $22,246 pertaining to a worthless stock deduction. The tax benefit of this deduction was based on the write-off of the Company's investment in one of its Canadian subsidiaries for US tax purposes reduced by $1,019 of tax provided for a valuation allowance applicable to the related state deferred income tax asset. The exercise of non-qualified stock appreciation rights and options during fiscal 2017, 2016 and 2015 resulted in $1,921, $212 and $352, respectively, of income tax benefits to the Company derived from the difference between the market and option price of the shares at the date of exercise and the fair value of the options on the grant date. Vesting of stock awards and other stock compensation in fiscal 2017, 2016 and 2015 resulted in $482, $(4) and $690, respectively, of incremental income tax benefits (expense) over the amounts previously reported for financial reporting purposes. Due to the adoption of ASU 2016-09, the tax benefits for fiscal 2017 were recorded in income tax expense in the statements of consolidated income, while the fiscal 2016 and 2015 tax (expense) benefits were recorded in additional paid-in capital. Effective Tax Rates The following reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate:
Consolidated Balance Sheets Significant components of the Company’s deferred tax assets and liabilities are as follows:
Valuation allowances are provided against deferred tax assets where it is considered more-likely-than-not that the Company will not realize the benefit of such assets. The remaining net deferred tax asset is the amount management believes is more-likely-than-not of being realized. The realization of these deferred tax assets can be impacted by changes to tax laws, statutory rates and future income levels. U.S. federal income taxes are provided on the portion of non-U.S. subsidiaries' income that is not considered to be permanently reinvested outside the U.S. and may be remitted to the U.S. At June 30, 2017, all undistributed earnings of non-U.S. subsidiaries are considered to be permanently reinvested and totaled approximately $92,106, for which no U.S. tax has been provided. Determination of the net amount of the unrecognized tax liability with respect to the distribution of these earnings is not practicable; however, foreign tax credits would be available to partially reduce U.S. income taxes in the event of a distribution. In fiscal 2015, $17,793 of cash was distributed by one of the Company's non-US subsidiaries as a non-taxable return of capital. Unrecognized Income Tax Benefits The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2017, 2016 and 2015:
Included in the balance of unrecognized income tax benefits at June 30, 2017, 2016 and 2015 are $3,323, $2,691 and $2,377, respectively, of income tax benefits that, if recognized, would affect the effective income tax rate. During 2017, 2016 and 2015, the Company recognized $163 and $127 and $49 of expense, respectively, for interest and penalties related to unrecognized income tax benefits in its statements of consolidated income. The Company had a liability for penalties and interest of $787 and $625 as of June 30, 2017 and 2016, respectively. The Company does not anticipate a significant change to the total amount of unrecognized income tax benefits within the next twelve months. The Company is subject to U.S. federal income tax examinations for the tax years 2014 through 2017 and to state and local income tax examinations for the tax years 2011 through 2017. In addition, the Company is subject to foreign income tax examinations for the tax years 2010 through 2017. The Company’s unrecognized income tax benefits are included in other liabilities in the consolidated balance sheets since payment of cash is not expected within one year. |
Shareholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHAREHOLDERS' EQUITY | SHAREHOLDERS’ EQUITY Treasury Shares At June 30, 2017, 596 shares of the Company’s common stock held as treasury shares were restricted as collateral under escrow arrangements relating to change in control and director and officer indemnification agreements. Accumulated Other Comprehensive Income (Loss) Changes in the accumulated other comprehensive income (loss) for the years ended June 30, 2017, 2016 and 2015, are comprised of the following amounts, shown net of taxes:
Other Comprehensive Income (Loss) Details of other comprehensive income (loss) are as follows:
Net Income Per Share Basic net income per share is based on the weighted-average number of common shares outstanding. Diluted net income per share includes the dilutive effect of potential common shares outstanding. Under the two-class method of computing net income per share, non-vested share-based payment awards that contain rights to receive non-forfeitable dividends are considered participating securities. The Company’s participating securities include RSUs and restricted stock awards. The Company calculated basic and diluted net income per share under both the treasury stock method and the two-class method. For the years presented there were no material differences in the net income per share amounts calculated using the two methods. Accordingly, the treasury stock method is disclosed below. The following table presents amounts used in computing net income per share and the effect on the weighted-average number of shares of dilutive potential common shares:
Stock appreciation rights and options relating to 141, 775 and 435 shares of common stock were outstanding at June 30, 2017, 2016 and 2015, respectively, but were not included in the computation of diluted earnings per share for the fiscal years then ended as they were anti-dilutive. |
Share - Based Compensation |
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Share-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Share-Based Incentive Plans Following approval by the Company's shareholders in October 2015, the 2015 Long-Term Performance Plan (the "2015 Plan") replaced the 2011 Long-Term Performance Plan. The 2015 Plan, which expires in 2020, provides for granting of SARs, stock options, stock awards, cash awards, and such other awards or combination thereof as the Executive Organization and Compensation Committee or, in the case of director awards, the Corporate Governance Committee of the Board of Directors (together referred to as the Committee) may determine to officers, other key employees and members of the Board of Directors. Grants are generally made at regularly scheduled committee meetings. Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, stock options, performance shares, restricted stock, and RSUs) are summarized in the table below:
Such amounts are included in selling, distribution and administrative expense in the accompanying statements of consolidated income. The total income tax benefit recognized in the statements of consolidated income for share-based compensation plans was $4,848, $1,595 and $1,749 for fiscal years 2017, 2016 and 2015, respectively. It has been the practice of the Company to issue shares from treasury to satisfy requirements of awards paid with shares. The aggregate unrecognized compensation cost for share-based award programs with the potential to be paid at June 30, 2017 are summarized in the table below:
Cost of these programs will be recognized as expense over the weighted-average remaining vesting period of 2.0 years. The aggregate number of shares of common stock which may be awarded under the 2015 Plan is 2,500; shares available for future grants at June 30, 2017 were 2,021. Stock Appreciation Rights and Stock Options The weighted-average assumptions used for SARs and stock option grants issued in fiscal 2017, 2016 and 2015 are:
The expected life is based upon historical exercise experience of the officers, other key employees and members of the Board of Directors. The risk free interest rate is based upon U.S. Treasury zero-coupon bonds with remaining terms equal to the expected life of the SARs and stock options. The assumed dividend yield has been estimated based upon the Company’s historical results and expectations for changes in dividends and stock prices. The volatility assumption is calculated based upon historical daily price observations of the Company’s common stock for a period equal to the expected life. SARs are redeemable solely in Company common stock. The exercise price of stock option awards may be settled by the holder with cash or by tendering Company common stock. A summary of SARs and stock options activity is presented below:
The weighted-average remaining contractual terms for SARs and stock options outstanding, exercisable, and expected to vest at June 30, 2017 were 7.0, 5.3, and 6.9 years, respectively. The aggregate intrinsic values of SARs and stock options outstanding, exercisable, and expected to vest at June 30, 2017 were $20,456 $12,051, and $20,075, respectively. The aggregate intrinsic value of the SARs and stock options exercised during fiscal 2017, 2016, and 2015 was $8,396, $2,422, and $1,601, respectively. The total fair value of shares vested during fiscal 2017, 2016, and 2015 was $1,788, $1,291, and $2,187, respectively. Performance Shares Performance shares are paid in shares of Applied stock at the end of a three-year period provided the Company achieves goals established by the committee. The number of Applied shares payable will vary depending on the level of the goals achieved. A summary of nonvested performance shares activity at June 30, 2017 is presented below:
The Committee set three one-year goals for each of the 2017, 2016 and 2015 grants. Each fiscal year during the three-year term has its own separate goals, tied to the Company’s earnings before interest, tax, depreciation, and amortization (EBITDA) and after-tax return on assets (ROA). Achievement during any particular fiscal year is awarded and “banked” for payout at the end of the three-year term. Based upon the outstanding grants as of June 30, 2017, the maximum number of shares which could be earned in future periods was 91. Restricted Stock and Restricted Stock Units Restricted stock award recipients are entitled to receive dividends on, and have voting rights with respect to their respective shares, but are restricted from selling or transferring the shares prior to vesting. Restricted stock awards vest over periods of one to four years. RSUs are grants valued in shares of Applied stock, but shares are not issued until the grants vest one to four years from the award date, assuming continued employment with Applied. Applied primarily pays dividend equivalents on RSUs on a current basis. A summary of the status of the Company’s non-vested restricted stock and RSUs at June 30, 2017 is presented below:
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Benefit Plans |
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BENEFIT PLANS | BENEFIT PLANS Retirement Savings Plan Substantially all U.S. employees participate in the Applied Industrial Technologies, Inc. Retirement Savings Plan. Participants may elect 401(k) contributions of up to 50% of their compensation, subject to Internal Revenue Code maximums. The Company partially matches 401(k) contributions by participants. The Company’s expense for matching of employees’ 401(k) contributions was $6,677, $2,535 and $3,156 during fiscal 2017, 2016 and 2015, respectively. Deferred Compensation Plans The Company has deferred compensation plans that enable certain employees of the Company to defer receipt of a portion of their compensation. Non-employee directors were able to defer receipt of director fees until January 1, 2015. The Company funded these deferred compensation liabilities by making contributions to rabbi trusts. Assets held in these rabbi trusts consist of investments in money market and mutual funds and Company common stock. Post-employment Benefit Plans The Company provides the following post-employment benefits which, except for the Qualified Defined Benefit Retirement Plan and Key Executive Restoration Plan, are unfunded: Supplemental Executive Retirement Benefits Plan The Company has a non-qualified pension plan to provide supplemental retirement benefits to certain officers. Benefits are payable and determinable at retirement based upon a percentage of the participant’s historical compensation. The Executive Organization and Compensation Committee of the Board of Directors froze participant benefits (credited service and final average earnings) and entry into the Supplemental Executive Retirement Benefits Plan (SERP) effective December 31, 2011. Key Executive Restoration Plan In fiscal 2012, the Company adopted the Key Executive Restoration Plan (KERP), a funded, non-qualified deferred compensation plan, to replace the SERP. The Company recorded $289, $268, and $300 of expense associated with this plan in fiscal 2017, 2016, and 2015, respectively. Qualified Defined Benefit Retirement Plan The Company has a qualified defined benefit retirement plan that provides benefits to certain hourly employees at retirement. These employees do not participate in the Retirement Savings Plan. The benefits are based on length of service and date of retirement. Salary Continuation Benefits The Company has agreements with certain retirees of acquired companies to pay monthly retirement benefits through fiscal 2020. Retiree Health Care Benefits The Company provides health care benefits, through third-party policies, to eligible retired employees who pay a specified monthly premium. Premium payments are based upon current insurance rates for the type of coverage provided and are adjusted annually. Certain monthly health care premium payments are partially subsidized by the Company. Additionally, in conjunction with a fiscal 1998 acquisition, the Company assumed the obligation for a post-retirement medical benefit plan which provides health care benefits to eligible retired employees at no cost to the individual. The Company uses a June 30 measurement date for all plans. The following table sets forth the changes in benefit obligations and plan assets during the year and the funded status for the post-employment plans at June 30:
The amounts recognized in the consolidated balance sheets and in accumulated other comprehensive loss for the post-employment plans were as follows:
The following table provides information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:
The net periodic costs (benefits) are as follows:
The estimated net actuarial loss and prior service cost for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $424 and $27, respectively. The estimated net actuarial gain and income from prior service cost for the retiree health care benefits that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $155 and $369, respectively. Assumptions A discount rate is used to determine the present value of future payments. In general, the Company’s liability increases as the discount rate decreases and decreases as the discount rate increases. The Company computes a weighted-average discount rate taking into account anticipated plan payments and the associated interest rates from the Citigroup Pension Discount Yield Curve and the BPS&M Discount Curve. During fiscal 2015, the Society of Actuaries released a series of updated mortality tables resulting from recent studies measuring mortality rates for various groups of individuals. As of June 30, 2015, the Company adopted these mortality tables, which reflect improved trends in longevity and have the effect of increasing the estimate of benefits to be received by plan participants. The weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost for the plans were as follows:
The assumed health care cost trend rates used in measuring the accumulated benefit obligation for retiree health care benefits were 7.0% as of June 30, 2017 and 2016, respectively, decreasing to 5.0% by 2027. A one-percentage point change in the assumed health care cost trend rates would have had the following effects as of June 30, 2017 and for the year then ended:
Plan Assets The fair value of each major class of plan assets for the Company’s Qualified Defined Benefit Retirement Plan is valued using either quoted market prices in active markets for identical instruments; Level 1 in the fair value hierarchy, or other inputs that are observable, either directly or indirectly; Level 2 in the fair value hierarchy. Following are the fair values and target allocation as of June 30:
* Equity securities do not include any Company common stock. The Company has established an investment policy and regularly monitors the performance of the assets of the trust maintained in conjunction with the Qualified Defined Benefit Retirement Plan. The strategy implemented by the trustee of the Qualified Defined Benefit Retirement Plan is to achieve long-term objectives and invest the pension assets in accordance with ERISA and fiduciary standards. The long-term primary objectives are to provide for a reasonable amount of long-term capital, without undue exposure to risk; to protect the Qualified Defined Benefit Retirement Plan assets from erosion of purchasing power; and to provide investment results that meet or exceed the actuarially assumed long-term rate of return. The expected long-term rate of return on assets assumption was developed by considering the historical returns and the future expectations for returns of each asset class as well as the target asset allocation of the pension portfolio. Cash Flows Employer Contributions The Company expects to contribute $2,820 to its pension benefit plans and $190 to its retiree health care benefit plans in fiscal 2017. Contributions do not equal estimated future benefit payments as certain payments are made from plan assets. Estimated Future Benefit Payments The following benefit payments, which reflect expected future service, as applicable, are expected to be paid in each of the next five years and in the aggregate for the subsequent five years:
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company leases many service center and distribution center facilities, vehicles and equipment under non-cancelable lease agreements accounted for as operating leases. The minimum annual rental commitments under non-cancelable operating leases as of June 30, 2017 are as follows:
Rental expense incurred for operating leases, principally from leases for real property, vehicles and computer equipment was $35,900 in 2017, $37,300 in 2016 and $39,300 in 2015, and was classified within selling, distribution and administrative expenses on the statements of consolidated income. The Company maintains lease agreements for many of the operating facilities of businesses it acquires from previous owners. In many cases, the previous owners of the business acquired become employees of Applied and occupy management positions within those businesses. The payments under lease agreements of this nature totaled $2,400, $3,800, $3,100 and in fiscal 2017, 2016 and 2015, respectively. |
Segment and Geographic Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION The Company's reportable segments are: Service Center Based Distribution and Fluid Power Businesses. These reportable segments contain the Company's various operating segments which have been aggregated based upon similar economic and operating characteristics. The Service Center Based Distribution segment provides customers with solutions to their maintenance, repair and original equipment manufacturing needs through the distribution of industrial products including bearings, power transmission components, fluid power components and systems, industrial rubber products, linear motion products, tools, safety products, and other industrial and maintenance supplies. The Fluid Power Businesses segment distributes fluid power components and operates shops that assemble fluid power systems and components, performs equipment repair, and offers technical advice to customers. The accounting policies of the Company’s reportable segments are generally the same as those described in note 1. Intercompany sales, primarily from the Fluid Power Businesses segment to the Service Center Based Distribution segment of $23,704, $21,485, and $24,087, in fiscal 2017, 2016, and 2015, respectively, have been eliminated in the following table. Segment Financial Information
ERP related assets are included in assets used in the business and capital expenditures within the Service Center Based Distribution segment. Within the geographic disclosures, these assets are included in the United States. Expenses associated with the ERP are included in the Corporate and other income, net, line in the reconciliation of operating income for reportable segments to the consolidated income before income taxes table below. A reconciliation of operating income for reportable segments to the consolidated income before income taxes is as follows:
Fluctuations in corporate and other (income) expense, net, are due to changes in corporate expenses, as well as in the amounts and levels of certain supplier support benefits and expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items. Product Category Net sales by product category are as follows:
The fluid power product category includes sales of hydraulic, pneumatic, lubrication and filtration components and systems, and repair services through the Company’s Fluid Power Businesses segment as well as the Service Center Based Distribution segment. Geographic Information Net sales are presented in geographic areas based on the location of the facility shipping the product. Long-lived assets are based on physical locations and are comprised of the net book value of property and intangible assets. Information by geographic area is as follows:
Other countries consist of Mexico, Australia, New Zealand, and Singapore. |
Commitments and Contingencies |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES The Company is a party to various pending judicial and administrative proceedings. Based on circumstances currently known, the Company believes the likelihood is remote that the ultimate resolution of any of these matters will have, either individually or in the aggregate, a material adverse effect on the Company’s consolidated financial position, results of operations, or cash flows. |
Other (Income) Expense, Net |
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OTHER (INCOME) EXPENSE, NET | OTHER (INCOME) EXPENSE, NET Other (income) expense, net, consists of the following:
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Subsequent Event Subsequent Events (Notes) |
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Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | SUBSEQUENT EVENTS We have evaluated events and transactions occurring subsequent to June 30, 2017 through the date the financial statements were issued. On July 3, 2017, the Company acquired 100% of the outstanding stock of DICOFASA, located in Puebla, Mexico, for a purchase price of approximately $5,898. The Company funded this acquisition using available cash. As a distributor of accessories and components for hydraulic systems and lubrication, this business will be included in the Fluid Power Businesses Segment. |
Schedule II - Valuation and Qualifying Accounts |
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VALUATION AND QUALIFYING ACCOUNTS | APPLIED INDUSTRIAL TECHNOLOGIES, INC. & SUBSIDIARIES SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED JUNE 30, 2017, 2016, AND 2015 (in thousands)
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Business and Accounting Policies (Policies) |
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Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Business | Business Applied Industrial Technologies, Inc. and subsidiaries (the “Company” or “Applied”) is a leading distributor of bearings, power transmission products, fluid power components, and other industrial supplies, serving Maintenance Repair & Operations (MRO) and Original Equipment Manufacturer (OEM) customers in virtually every industry. In addition, Applied provides engineering, design and systems integration for industrial and fluid power applications, as well as customized mechanical, fabricated rubber and fluid power shop services. Applied also offers storeroom services and inventory management solutions that provide added value to its customers. Although the Company does not generally manufacture the products it sells, it does assemble and repair certain products and systems. |
Consolidation | Consolidation The consolidated financial statements include the accounts of Applied Industrial Technologies, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. |
Foreign Currency | Foreign Currency The financial statements of the Company’s Canadian, Mexican, Australian and New Zealand subsidiaries are measured using local currencies as their functional currencies. Assets and liabilities are translated into U.S. dollars at current exchange rates, while income and expenses are translated at average exchange rates. Translation gains and losses are reported in other comprehensive income (loss) in the statements of consolidated comprehensive income. Gains and losses resulting from transactions denominated in foreign currencies are included in the statements of consolidated income as a component of other (income) expense, net. |
Estimates | Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the period. Actual results may differ from the estimates and assumptions used in preparing the consolidated financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all short-term, highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Cash and cash equivalents are carried at cost, which approximates fair value. |
Marketable Securities | Marketable Securities The primary marketable security investments of the Company include money market and mutual funds held in a rabbi trust for a non-qualified deferred compensation plan. These are included in other assets in the consolidated balance sheets, are classified as trading securities, and reported at fair value based on quoted market prices. Changes in the fair value of the investments during the period are recorded in other (income) expense, net in the statements of consolidated income. |
Concentration of Credit Risk | Concentration of Credit Risk The Company has a broad customer base representing many diverse industries across North America, Australia, New Zealand, and Singapore. As such, the Company does not believe that a significant concentration of credit risk exists in its accounts receivable. The Company’s cash and cash equivalents consist of deposits with commercial banks and regulated non-bank subsidiaries. While Applied monitors the creditworthiness of these institutions, a crisis in the financial systems could limit access to funds and/or result in the loss of principal. The terms of these deposits and investments provide that all monies are available to the Company upon demand. |
Allowances for Doubtful Accounts | Allowances for Doubtful Accounts The Company evaluates the collectibility of trade accounts receivable based on a combination of factors. Initially, the Company estimates an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience. This initial estimate is adjusted based on recent trends of customers and industries estimated to be greater credit risks, trends within the entire customer pool, and changes in the overall aging of accounts receivable. Accounts are written off against the allowance when it becomes evident collection will not occur. While the Company has a large customer base that is geographically dispersed, a general economic downturn in any of the industry segments in which the Company operates could result in higher than expected defaults, and therefore, the need to revise estimates for bad debts. |
Inventories | Inventories Inventories are valued at the average cost method, using the last-in, first-out (LIFO) method for U.S. inventories and the average cost method for foreign inventories. The Company adopted the link chain dollar value LIFO method of accounting for U.S. inventories in fiscal 1974. At June 30, 2017, approximately 22.5% of the Company’s domestic inventory dollars relate to LIFO layers added in the 1970s. The Company maintains five LIFO pools based on the following product groupings: bearings, power transmission products, rubber products, fluid power products and other products. LIFO layers and/or liquidations are determined consistently year-to-year. The Company evaluates the recoverability of its slow moving and inactive inventories at least quarterly. The Company estimates the recoverable cost of such inventory by product type while considering factors such as its age, historic and current demand trends, the physical condition of the inventory, as well as assumptions regarding future demand. The Company’s ability to recover its cost for slow moving or obsolete inventory can be affected by such factors as general market conditions, future customer demand, and relationships with suppliers. Historically, the Company’s inventories have demonstrated long shelf lives, are not highly susceptible to obsolescence, and, in certain instances, can be eligible for return under supplier return programs. |
Supplier Purchasing Programs | Supplier Purchasing Programs The Company enters into agreements with certain suppliers providing inventory purchase incentives. The Company’s inventory purchase incentive arrangements are unique to each supplier and are generally annual programs ending at either the Company’s fiscal year end or the supplier’s year end; however, program length and ending dates can vary. Incentives are received in the form of cash or credits against purchases upon attainment of specified purchase volumes and are received either monthly, quarterly or annually. The incentives are generally a specified percentage of the Company’s net purchases based upon achieving specific purchasing volume levels. These percentages can increase or decrease based on changes in the volume of purchases. The Company accrues for the receipt of these inventory purchase incentives based upon cumulative purchases of inventory. The percentage level utilized is based upon the estimated total volume of purchases expected during the life of the program. Supplier programs are analyzed each quarter to determine the appropriateness of the amount of purchase incentives accrued. Upon program completion, differences between estimates and actual incentives subsequently received have not been material. Benefits under these supplier purchasing programs are recognized under the Company’s inventory accounting methods as a reduction of cost of sales when the inventories representing these purchases are recorded as cost of sales. Accrued incentives expected to be settled as a credit against future purchases are reported on the consolidated balance sheet as an offset to amounts due to the related supplier. |
Property and related Depreciation and Amortization | Property and Related Depreciation and Amortization Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets and is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Buildings, building improvements and leasehold improvements are depreciated over ten to thirty years or the life of the lease if a shorter period, and equipment is depreciated over three to ten years. The Company capitalizes internal use software development costs in accordance with guidance on accounting for costs of computer software developed or obtained for internal use. Amortization of software begins when it is ready for its intended use, and is computed on a straight-line basis over the estimated useful life of the software, generally not to exceed twelve years. Capitalized software and hardware costs are classified as property on the consolidated balance sheets. The carrying values of property and equipment are reviewed for impairment when events or changes in circumstances indicate that the recorded value cannot be recovered from undiscounted future cash flows. Impairment losses, if any, would be measured based upon the difference between the carrying amount and the fair value of the assets. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill is recognized as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is not amortized. Goodwill is reviewed for impairment annually as of January 1 or whenever changes in conditions indicate an evaluation should be completed. These conditions could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. The Company utilizes discounted cash flow models and market multiples for comparable businesses to determine the fair value of reporting units. Evaluating impairment requires significant judgment by management, including estimated future operating results, estimated future cash flows, the long-term rate of growth of the business, and determination of an appropriate discount rate. While the Company uses available information to prepare the estimates and evaluations, actual results could differ significantly. The Company recognizes acquired identifiable intangible assets such as customer relationships, trade names, vendor relationships, and non-competition agreements apart from goodwill. Customer relationship identifiable intangibles are amortized using the sum-of-the-years-digits method over estimated useful lives consistent with assumptions used in the determination of their value. Amortization of all other finite-lived identifiable intangible assets is computed using the straight-line method over the estimated period of benefit. Amortization of identifiable intangible assets is included in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Identifiable intangible assets with finite lives are reviewed for impairment when changes in conditions indicate carrying value may not be recoverable. Identifiable intangible assets with indefinite lives are reviewed for impairment on an annual basis or whenever changes in conditions indicate an evaluation should be completed. The Company does not currently have any indefinite-lived identifiable intangible assets. |
Self-Insurance Liabilities | Self-Insurance Liabilities The Company maintains business insurance programs with significant self-insured retention covering workers’ compensation, business, automobile, general product liability and other claims. The Company accrues estimated losses including those incurred but not reported using actuarial calculations, models and assumptions based on historical loss experience. The Company also maintains a self-insured health benefits plan which provides medical benefits to U.S. based employees electing coverage under the plan. The Company estimates its reserve for all unpaid medical claims, including those incurred but not reported, based on historical experience, adjusted as necessary based upon management’s reasoned judgment. |
Revenue Recognition | Revenue Recognition Sales are recognized when there is evidence of an arrangement, the sales price is fixed, collectibility is reasonably assured and the product’s title and risk of loss is transferred to the customer. Typically, these conditions are met when the product is shipped to the customer. The Company charges shipping and handling fees when products are shipped or delivered to a customer, and includes such amounts in net sales. The Company reports its sales net of actual sales returns and the amount of reserves established for anticipated sales returns based on historical rates. Sales tax collected from customers is excluded from net sales in the accompanying statements of consolidated income. |
Shipping and Handling Costs | Shipping and Handling Costs The Company records freight payments to third parties in cost of sales and internal delivery costs in selling, distribution and administrative expenses in the accompanying statements of consolidated income. Internal delivery costs in selling, distribution and administrative expenses were approximately $20,060, $21,480 and $24,430 for the fiscal years ended June 30, 2017, 2016 and 2015, respectively. |
Income Taxes | Income Taxes Income taxes are determined based upon income and expenses recorded for financial reporting purposes. Deferred income taxes are recorded for estimated future tax effects of differences between the bases of assets and liabilities for financial reporting and income tax purposes, giving consideration to enacted tax laws. Uncertain tax positions meeting a more-likely-than-not recognition threshold are recognized in accordance with the Income Taxes topic of the ASC (Accounting Standards Codification). The Company recognizes accrued interest and penalties related to unrecognized income tax benefits in the provision for income taxes. |
Share-Based Compensation | Share-Based Compensation Share-based compensation represents the cost related to share-based awards granted to employees under the 2015 Long-Term Performance Plan, the 2011 Long-Term Performance Plan, or the 2007 Long-Term Performance Plan. The Company measures share-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost over the requisite service period. Non-qualified stock appreciation rights (SARs) and stock options are granted with an exercise price equal to the closing market price of the Company’s common stock at the date of grant and the fair values are determined using a Black-Scholes option pricing model, which incorporates assumptions regarding the expected volatility, the expected option life, the risk-free interest rate and the expected dividend yield. SARs and stock option awards generally vest over four years of continuous service and have ten-year contractual terms. The fair value of restricted stock awards, restricted stock units (RSUs), and performance shares are based on the closing market price of Company common stock on the grant date. |
Treasury Shares | Treasury Shares Shares of common stock repurchased by the Company are recorded at cost as treasury shares and result in a reduction of shareholders’ equity in the consolidated balance sheets. The Company uses the weighted-average cost method for determining the cost of shares reissued. The difference between the cost of the shares and the reissuance price is added to or deducted from additional paid-in capital. |
Change in Accounting Principle | Changes in Accounting Principle Share-based Payment Awards In March 2016, the FASB issued its final standard on simplifying the accounting for share-based payment awards. This standard, issued as ASU 2016-09, simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification on the statement of cash flows, and accounting for forfeitures. This update is effective for annual and interim financial statement periods beginning after December 15, 2016, with early adoption permitted. The Company early adopted ASU 2016-09 in the first quarter of fiscal 2017. The new standard requires prospective recognition of excess tax benefits and deficiencies resulting from share-based compensation awards vesting and exercises be recognized in the income statement. Previously, these amounts were recognized in additional paid-in capital. Net excess tax benefits of $2,403 for the year ended June 30, 2017, were recognized as a reduction of income tax expense. In addition, ASU 2016-09 requires excess tax benefits and deficiencies to be prospectively excluded from the assumed future proceeds in the calculation of diluted shares, resulting in an insignificant increase in diluted weighted average shares outstanding for year ended June 30, 2017, which did not have a material impact on earnings per share. The Company has elected to continue to estimate the number of share-based awards expected to vest, as permitted by ASU 2016-09, rather than electing to account for forfeitures as they occur. The standard requires that excess tax benefits from share-based compensation awards be reported as operating activities in the consolidated statements of cash flows. Previously, these cash flows were included in financing activities. We have elected to apply this change on a prospective basis, resulting in an increase in net cash provided by operating activities and net cash used in financing activities of $2,403 for the year ended June 30, 2017. ASU 2016-09 requires that employee taxes paid when an employer withholds shares for tax-withholding purposes be reported as financing activities in the consolidated statements of cash flows. Previously, these cash flows were included in operating activities. This change was required to be applied on a retrospective basis. As such, the consolidated statements of cash flows for the prior periods were revised. This change resulted in an increase in net cash provided by operating activities and in net cash used in financing activities of $1,022 and $2,469 for the years ended June 30, 2016 and 2015, respectively. Debt Issue Costs In April 2015, the FASB issued its final standard on simplifying the presentation of debt issue costs. This standard, issued as ASU 2015-03, requires that all costs incurred to issue debt be presented in the balance sheet as a direct reduction from the carrying value of the debt, rather than as an asset. This update is effective for annual financial statement periods beginning after December 15, 2015, and interim periods within those fiscal years. As required, the Company adopted ASU 2015-03 in the first quarter of fiscal 2017 and has applied the new standard retrospectively. The retrospective adoption of ASU 2015-03 resulted in the reclassification as of June 30, 2016 of unamortized debt issue costs of $105 from other current assets to a reduction of current portion of long-term debt and $399 from other assets to a reduction of long-term debt on the Company's consolidated balance sheets. Measurement-period Adjustments for Business Combinations In September 2015, the FASB issued its final standard on simplifying the accounting for measurement-period adjustments for business combinations. This standard, issued as ASU 2015-16, requires that an entity that is the acquirer in a business combination that identifies adjustments to provisional amounts during the measurement period to recognize those adjustments in the reporting period in which the amounts are determined. This update further requires that the acquirer record, in the same period's financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The update is effective for annual and interim financial statement periods beginning after December 15, 2015, and is applied prospectively to adjustments to provisional amounts that occur after the effective date of this update, with early adoption permitted. The Company adopted ASU 2015-16 in the first quarter of fiscal 2017. The adoption of this update did not have a material impact on the financial statements of the Company. |
New Accounting Pronouncements | New Accounting Pronouncements In May 2014, the FASB issued its final standard on the recognition of revenue from contracts with customers. The standard, issued as ASU 2014-09, outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry specific guidance. The core principle of this model is that "an entity recognizes revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services." In August 2015, the FASB issued ASU 2015-14 to delay the effective date of ASU 2014-09 by one year. In accordance with the delay, the update is effective for financial statement periods beginning after December 15, 2017 and may be adopted either retrospectively or on a modified retrospective basis. Early adoption is permitted, but not before financial statement periods beginning after December 15, 2016. In March 2016 the FASB issued ASU 2016-08 and ASU 2016-10, and in May 2016 the FASB issued ASU 2016-12, which clarify the guidance in ASU 2014-09 but do not change the core principle of the revenue recognition model. The Company has evaluated the provisions of the new standard and is in the process of assessing its impact on financial statements, information systems, business processes, and financial statement disclosures. We are completing an analysis of revenue streams at each of the business units and are evaluating the impact the new standard may have on revenue recognition. The Company primarily sells purchased products and recognizes revenue at point of sale or delivery and this is not expected to change under the new standard. Preliminarily, the Company plans to use the modified retrospective method of adoption, and based on initial reviews, the standard is not expected to have a material impact on the Company's consolidated financial statements. We do anticipate expanded disclosures on revenue in order to comply with the new ASU. The Company will continue to evaluate the impacts of the adoption of the standard and the preliminary assessments are subject to change. In July 2015, the FASB issued its final standard on simplifying the measurement of inventory. This standard, issued as ASU 2015-11, specifies that an entity should measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The new standard does not apply to inventory that is measured using LIFO; therefore, it is not applicable to the Company's U.S. inventory values, but does apply to the Company's foreign inventories which are valued using the average cost method. The update is effective for financial statement periods beginning after December 15, 2016, with earlier application permitted. The Company will adopt this standard when it becomes effective in the first quarter of fiscal 2018, and it is not expected to have a material impact on the Company's financial statements and related disclosures. In February 2016, the FASB issued its final standard on accounting for leases. This standard, issued as ASU 2016-02, requires that an entity that is a lessee recognize lease assets and lease liabilities on the balance sheet for all leases and disclose key information about leasing arrangements. The core principle of this update is that a "lessee should recognize the assets and liabilities that arise from leases." This update is effective for financial statement periods beginning after December 15, 2018, with earlier application permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for financial statement periods beginning after December 15, 2019, with early adoption permitted for financial statement periods beginning after December 15, 2018. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In August 2016, the FASB issued its final standard on the classification of certain cash receipts and cash payments within the statement of cash flows. This standard, issued as ASU 2016-15, makes a number of changes meant to add or clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. This update is effective for annual and interim financial statement periods beginning after December 15, 2018, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In October 2016, the FASB issued its final standard on the income tax consequences of intra-entity transfers of assets other than inventory. This standard, issued as ASU 2016-16, requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs and eliminates the exception for an intra-entity transfer of an asset other than inventory. This update is effective for annual and interim financial statement periods beginning after December 15, 2017, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. In January 2017, the FASB issued its final standard on simplifying the test for goodwill impairment. This standard, issued as ASU 2017-04, eliminates step 2 from the goodwill impairment test and instead requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This update is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. Upon adoption, the Company will apply this guidance prospectively to its annual and interim goodwill impairment tests and disclose the change in accounting principle. In March 2017, the FASB issued its final standard on improving the presentation of net periodic pension and postretirement benefit costs. This standard, issued as ASU 2017-07, requires that an employer report the service cost component for defined benefit plans and postretirement plans in the same line item in the income statement as other compensation costs arising from services rendered by the employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations. This update is effective for annual financial statement periods beginning after December 15, 2017, including interim periods within those annual periods. Early adoption is permitted as of the beginning of an annual period. The Company has decided to early adopt this standard as of the beginning of fiscal 2018, and will apply the guidance retrospectively to all periods presented. The impact of the adoption of this guidance will result in the reclassification of the other components of net benefit cost from selling, distribution, and administrative expense to other (income) expense, net in the statements of consolidated income, resulting in an increase to operating income. There is no impact to income before income taxes or net income, so therefore no impact to net income per share. The amounts reclassified would result in an increase in operating income of $796, $981 and $782 for the years ended June 30, 2017, June 30, 2016 and June 30, 2015, respectively. In May 2017, the FASB issued its final standard on scope of modification accounting. This standard, issued as 2017-09, provides guidance about which change to the terms or conditions of a share-based payment award require an entity to apply modification accounting. This update is effective for annual and interim financial statement periods beginning after December 15, 2017, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. |
Business Combinations Assets Acquired (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of Knox based on their estimated fair values at the acquisition date:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Items of Inventories | Inventories consist of the following:
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Goodwill and Intangibles (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Goodwill [Table Text Block] | The changes in the carrying amount of goodwill for both the Service Center Based Distribution Segment and the Fluid Power Businesses segment for the years ended June 30, 2017 and 2016 are as follows:
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Schedule of Acquired Finite-Lived Intangible Assets by Major Class [Table Text Block] | The Company's identifiable intangible assets resulting from business combinations are amortized over their estimated period of benefit and consist of the following:
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Debt Maturities of Long Term Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Maturities of Long-term Debt [Table Text Block] | The table below summarizes the aggregate maturities of amounts outstanding under long-term borrowing arrangements for each of the next five years:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of income before income taxes | The components of income before income taxes are as follows:
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Schedule of Components of Income Tax Expense (Benefit) [Table Text Block] | The provision (benefit) for income taxes consists of:
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Reconciliations of federal statutory income tax rate and Company's effective income tax rate | The following reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate:
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Components of the Company's net deferred tax assets | Significant components of the Company’s deferred tax assets and liabilities are as follows:
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Reconciliation of the Company's total gross unrecognized income tax benefits | The Company and its subsidiaries file income tax returns in U.S. federal, various state, local and foreign jurisdictions. The following table sets forth the changes in the amount of unrecognized tax benefits for the years ended June 30, 2017, 2016 and 2015:
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Shareholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification out of Accumulated Other Comprehensive Income [Table Text Block] | Changes in the accumulated other comprehensive income (loss) for the years ended June 30, 2017, 2016 and 2015, are comprised of the following amounts, shown net of taxes:
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Schedule of Comprehensive Income (Loss) | Details of other comprehensive income (loss) are as follows:
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Computation of basic and diluted earnings per share |
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Share - Based Compensation (Tables) |
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Schedule of share based compensation expense | The 2015 Plan, which expires in 2020, provides for granting of SARs, stock options, stock awards, cash awards, and such other awards or combination thereof as the Executive Organization and Compensation Committee or, in the case of director awards, the Corporate Governance Committee of the Board of Directors (together referred to as the Committee) may determine to officers, other key employees and members of the Board of Directors. Grants are generally made at regularly scheduled committee meetings. Compensation costs charged to expense under award programs paid (or to be paid) with shares (including SARs, stock options, performance shares, restricted stock, and RSUs) are summarized in the table below:
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Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block] | The aggregate unrecognized compensation cost for share-based award programs with the potential to be paid at June 30, 2017 are summarized in the table below:
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Weighted-average assumptions used for SARs and stock option grants issued | The weighted-average assumptions used for SARs and stock option grants issued in fiscal 2017, 2016 and 2015 are:
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Summary of SARs and stock option activity | A summary of SARs and stock options activity is presented below:
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Summary of the performance shares and restricted stock activity | A summary of nonvested performance shares activity at June 30, 2017 is presented below:
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Summary of the performance shares and restricted stock activity | A summary of the status of the Company’s non-vested restricted stock and RSUs at June 30, 2017 is presented below:
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Benefit Plans (Tables) |
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Retirement Benefits, Description [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of changes in benefit obligations, plan assets and funded status for the post employment plans | The following table sets forth the changes in benefit obligations and plan assets during the year and the funded status for the post-employment plans at June 30:
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Amounts Recognized in Consolidated Balance Sheet [Table Text Block] | The amounts recognized in the consolidated balance sheets and in accumulated other comprehensive loss for the post-employment plans were as follows:
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Information for pension plans with projected benefit obligations in excess of plan assets | The following table provides information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets:
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Net periodic costs | The net periodic costs (benefits) are as follows:
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Weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost | The weighted-average actuarial assumptions used to determine benefit obligations and net periodic benefit cost for the plans were as follows:
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One-Percentage Point Change in Assumed Health Care Cost Trend Rates | A one-percentage point change in the assumed health care cost trend rates would have had the following effects as of June 30, 2017 and for the year then ended:
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Defined Benefit Plan Asset Information | Following are the fair values and target allocation as of June 30:
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Estimated future benefit payments | The following benefit payments, which reflect expected future service, as applicable, are expected to be paid in each of the next five years and in the aggregate for the subsequent five years:
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Leases (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Minimum annual rental commitments under non-cancelable operating leases | The minimum annual rental commitments under non-cancelable operating leases as of June 30, 2017 are as follows:
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Segment and Geographic Information (Tables) |
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment financial information | Segment Financial Information
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Reconciliation of operating income for reportable segments to the consolidated income before income taxes | A reconciliation of operating income for reportable segments to the consolidated income before income taxes is as follows:
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Net sales by product category | Net sales by product category are as follows:
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Information by geographic area | Information by geographic area is as follows:
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Other (Income) Expense, Net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense, net | Other (income) expense, net, consists of the following:
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Business Combinations Knox - Fair Value of Assets Acquired (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2015 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Jul. 01, 2014 |
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Business Acquisition [Line Items] | ||||
Goodwill | $ 254,406 | $ 206,135 | $ 202,700 | |
Knox Acquisition [Member] | ||||
Business Acquisition [Line Items] | ||||
Accounts receivable | $ 19,100 | |||
Inventories | 18,800 | |||
Property | 3,900 | |||
Identifiable intangible assets | 58,500 | |||
Goodwill | 63,200 | |||
Total assets acquired | 163,500 | |||
Accounts payable and accrued liabilities | 7,200 | |||
Deferred income taxes | 24,300 | |||
Net assets acquired | $ 132,000 | |||
Purchase price | 132,800 | |||
Working Capital Adjustments | (800) | |||
Total Consideration | $ 132,000 |
Inventories (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
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Inventory [Line Items] | ||
Inventory Write-down | $ 6,000 | |
Effect of LIFO Inventory Liquidation on Income | 9,414 | $ 2,100 |
Items Of Inventories | ||
U.S. inventories at average cost | 373,984 | 380,000 |
Foreign inventories at average cost | 108,734 | 105,465 |
Inventory, Gross, Total | 482,718 | 485,465 |
Less: Excess of average cost over LIFO cost for U.S. inventories | 137,573 | 147,244 |
Inventories on consolidated balance sheets | $ 345,145 | $ 338,221 |
Goodwill and Intangibles 1 (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Amortization details resulting from business combinations | ||
Amount | $ 296,822 | $ 302,304 |
Accumulated Amortization | 133,260 | 111,064 |
Net Book Value | 163,562 | 191,240 |
Customer relationships [Member] | ||
Amortization details resulting from business combinations | ||
Amount | 235,009 | 239,132 |
Accumulated Amortization | 102,414 | 84,566 |
Net Book Value | 132,595 | 154,566 |
Trade Names [Member] | ||
Amortization details resulting from business combinations | ||
Amount | 43,873 | 44,430 |
Accumulated Amortization | 19,295 | 16,099 |
Net Book Value | 24,578 | 28,331 |
Vendor relationships [Member] | ||
Amortization details resulting from business combinations | ||
Amount | 14,152 | 14,042 |
Accumulated Amortization | 9,141 | 8,003 |
Net Book Value | 5,011 | 6,039 |
Non-competition agreements [Member] | ||
Amortization details resulting from business combinations | ||
Amount | 3,788 | 4,700 |
Accumulated Amortization | 2,410 | 2,396 |
Net Book Value | $ 1,378 | $ 2,304 |
Debt Long Term Debt Maturities (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
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Debt Instrument [Line Items] | |
2018 | $ 4,919 |
2019 | 6,484 |
2020 | 33,051 |
2021 | 141,802 |
2022 | 40,245 |
Thereafter | $ 65,481 |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets Measured on Recurring Basis, Financial Statement Captions [Line Items] | ||
Marketable securities | $ 10,481 | $ 9,097 |
Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Components of income before income taxes | |||
U.S. | $ 154,472 | $ 139,960 | $ 152,618 |
Foreign | 12,494 | (60,982) | 23,253 |
Income Before Income Taxes | $ 166,966 | $ 78,978 | $ 175,871 |
Income Taxes Income Taxes 1 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Current: | |||
Federal | $ 26,456 | $ 45,226 | $ 52,861 |
State and local | 4,692 | 6,349 | 6,884 |
Foreign | 4,760 | 4,407 | 5,603 |
Total current | 35,908 | 55,982 | 65,348 |
Deferred: | |||
Federal | 852 | 397 | (3,799) |
State and local | 535 | (30) | (153) |
Foreign | (4,239) | (6,948) | (1,009) |
Total deferred | (2,852) | (6,581) | (4,961) |
Total | $ 33,056 | $ 49,401 | $ 60,387 |
Income Taxes 2 (Details) |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Reconciliations of federal statutory income tax rate and Company's effective income tax rate: | |||
Statutory income tax rate | 35.00% | 35.00% | 35.00% |
State and local taxes | 2.80% | 5.20% | 2.50% |
Worthless stock deduction | (13.90%) | (0.00%) | (0.00%) |
Stock compensation | (1.40%) | (0.00%) | (0.00%) |
Goodwill impairment | 0.00% | 27.10% | 0.00% |
Foreign income taxes | (2.30%) | (3.00%) | (2.50%) |
Deductible dividend | (0.40%) | (0.90%) | (0.50%) |
Valuation allowance | 0.30% | 0.50% | 0.50% |
Other, net | (0.30%) | (1.30%) | (0.70%) |
Effective income tax rate | 19.80% | 62.60% | 34.30% |
Income Taxes 3 (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Deferred tax assets: | ||
Compensation liabilities not currently deductible | $ 26,873 | $ 25,992 |
Other expenses and reserves not currently deductible | 11,601 | 11,650 |
Goodwill and intangibles | 5,661 | 6,366 |
Foreign tax credit (expiring in years 2025-2026) | 709 | 849 |
Net operating loss carryforwards (expiring in years 2018-2037) | 5,729 | 4,960 |
Other | 119 | 83 |
Total deferred tax assets | 50,692 | 49,900 |
Less: Valuation allowance | (1,831) | (1,347) |
Deferred tax assets, net of valuation allowance | 48,861 | 48,553 |
Deferred tax liabilities: | ||
Inventories | (7,447) | (4,785) |
Goodwill and intangibles | 30,482 | 33,353 |
Depreciation and differences in property bases | (10,122) | (9,892) |
Total deferred tax liabilities | 48,051 | 48,030 |
Net deferred tax assets | 810 | 523 |
Net deferred tax assets are classified as follows: | ||
Deferred tax assets | 8,985 | 12,277 |
Other liabilities | (8,175) | (11,754) |
Net deferred tax assets | $ 810 | $ 523 |
Income Taxes 4 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Reconciliation of the Company's total gross unrecognized income tax benefits | |||
Unrecognized Income Tax Benefits at beginning of the year | $ 2,915 | $ 2,604 | $ 2,364 |
Current year tax positions | 574 | 539 | 472 |
Prior year tax positions | 259 | 0 | 0 |
Expirations of statutes of limitations | (189) | (132) | (160) |
Settlements | (26) | (96) | (72) |
Unrecognized Income Tax Benefits at end of year | $ 3,533 | $ 2,915 | $ 2,604 |
Shareholders' Equity Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Earnings Per Share [Abstract] | |||
Net income | $ 133,910 | $ 29,577 | $ 115,484 |
Average Shares Outstanding: | |||
Weighted-average common shares outstanding for basic computation | 39,013 | 39,254 | 40,892 |
Dilutive effect of potential common shares | 391 | 212 | 295 |
Weighted-average common shares outstanding for dilutive computation | 39,404 | 39,466 | 41,187 |
Net Income Per Share — Basic | $ 3.43 | $ 0.75 | $ 2.82 |
Net Income Per Share — Diluted | $ 3.40 | $ 0.75 | $ 2.80 |
Shareholders' Equity Textuals (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Shareholders' Equity (Textuals) [Abstract] | |||
Common stock held as treasury shares restricted as (in shares) | 596 | ||
Antidilutive Stock options and appreciation rights relating to the acquisition of shares of common stock not included in the computation of diluted earnings per share (in shares) | 141 | 775 | 435 |
Share - Based Compensation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Compensation costs charged to expense under award programs | |||
Total compensation costs under award programs | $ 5,520 | $ 4,067 | $ 4,461 |
Stock Options and Stock Appreciation Rights [ Member] | |||
Compensation costs charged to expense under award programs | |||
Total compensation costs under award programs | 1,891 | 1,543 | 1,610 |
Performance Shares [Member] | |||
Compensation costs charged to expense under award programs | |||
Total compensation costs under award programs | 1,331 | 446 | 836 |
Restricted stock and Restricted Stock units [Member] | |||
Compensation costs charged to expense under award programs | |||
Total compensation costs under award programs | $ 2,298 | $ 2,078 | $ 2,015 |
Share - Based Compensation 2 (Details) - Stock Options and Stock Appreciation Rights [ Member] - $ / shares |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
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Weighted-average assumptions used for SARs and stock option grants issued | |||
Expected life, in years | 4 years 10 months | 4 years 5 months | 4 years 8 months |
Risk free interest rate | 1.20% | 1.30% | 1.40% |
Dividend yield | 2.50% | 2.50% | 2.50% |
Volatility | 24.10% | 26.00% | 29.00% |
Per share fair value of SAR's and stock options granted during the year | $ 7.97 | $ 6.79 | $ 9.53 |
Share - Based Compensation 4 (Details) - Performance shares [Member] shares in Thousands |
12 Months Ended |
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Jun. 30, 2017
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Beginning Balance, Shares | shares | 37 |
Granted, shares | shares | 29 |
Vested, Shares | shares | (14) |
Ending Balance, Shares | shares | 52 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | |
Beginning Balance, Weighted-Average Grant-Date Fair Value | $ / shares | $ 46.01 |
Granted, Weighted-Average Grant-Date Fair Value | $ / shares | 44.56 |
Vested, Weighted-Average Grant- Date Fair Value | $ / shares | 50.39 |
Ending Balance, Weighted-Average Grant-Date Fair Value | $ / shares | $ 43.99 |
Share - Based Compensation - 5 (Details) - Restricted stock and Restricted Stock units [Member] shares in Thousands |
12 Months Ended |
---|---|
Jun. 30, 2017
$ / shares
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Beginning Balance, Shares | shares | 118 |
Beginning Balance, Weighted-Average Grant-Date Fair Value | $ / shares | $ 43.56 |
Granted, shares | shares | 47 |
Granted, Weighted-Average Grant-Date Fair Value | $ / shares | $ 52.91 |
Forfeitures | shares | (4) |
Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | $ 44.27 |
Vested, Shares | shares | (45) |
Vested, Weighted-Average Grant- Date Fair Value | $ / shares | $ 44.69 |
Ending Balance, Shares | shares | 116 |
Ending Balance, Weighted-Average Grant-Date Fair Value | $ / shares | $ 46.91 |
Benefit Plans Benefit Plans 1 (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Amounts recognized in the consolidated balance sheets: | ||
Post-employment benefits | $ 16,715 | $ 21,322 |
Pension Plan [Member] | ||
Amounts recognized in the consolidated balance sheets: | ||
Other current liabilities | 2,814 | 741 |
Post-employment benefits | 15,067 | 19,127 |
Net amount recognized | 17,881 | 19,868 |
Amounts recognized in accumulated other comprehensive loss: | ||
Net actuarial (loss) gain | (5,798) | (8,234) |
Prior service cost | (35) | (121) |
Total amounts recognized in accumulated other comprehensive loss | (5,833) | (8,355) |
Postretirement Health Coverage [Member] | ||
Amounts recognized in the consolidated balance sheets: | ||
Other current liabilities | 220 | 220 |
Post-employment benefits | 1,464 | 2,015 |
Net amount recognized | 1,684 | 2,235 |
Amounts recognized in accumulated other comprehensive loss: | ||
Net actuarial (loss) gain | 1,167 | 1,119 |
Prior service cost | 922 | 948 |
Total amounts recognized in accumulated other comprehensive loss | $ 2,089 | $ 2,067 |
Benefit Plans 2 (Details) - Pension Benefits [Member] - USD ($) $ in Thousands |
Jun. 30, 2017 |
Jun. 30, 2016 |
---|---|---|
Information for pension plans with projected benefit obligations and accumulated benefit obligations in excess of plan assets | ||
Projected benefit obligations | $ 24,411 | $ 26,605 |
Accumulated benefit obligations | 24,411 | 26,605 |
Fair value of plan assets | $ 6,530 | $ 6,737 |
Benefit Plans 3 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Pension Benefits [Member] | |||
Net periodic costs | |||
Service cost | $ 126 | $ 91 | $ 97 |
Interest cost | 687 | 879 | 896 |
Expected return on plan assets | (460) | (491) | (495) |
Recognized net actuarial loss (gain) | 872 | 913 | 559 |
Amortization of prior service cost | 86 | 86 | 86 |
Net periodic cost (benefits) | 1,311 | 1,478 | 1,143 |
Postretirement Health Coverage [Member] | |||
Net periodic costs | |||
Service cost | 29 | 22 | 53 |
Interest cost | 63 | 75 | 95 |
Expected return on plan assets | 0 | 0 | 0 |
Recognized net actuarial loss (gain) | (181) | (210) | (87) |
Amortization of prior service cost | (271) | (271) | (272) |
Net periodic cost (benefits) | $ (360) | $ (384) | $ (211) |
Benefit Plans 4 (Details) |
12 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Pension Benefits [Member] | ||
Assumptions used to determine benefit obligations at year end: | ||
Discount rate | 2.80% | 2.30% |
Assumptions used to determine net periodic benefit cost: | ||
Discount rate | 2.30% | 3.00% |
Expected return on plan assets | 7.00% | 7.00% |
Postretirement Health Coverage [Member] | ||
Assumptions used to determine benefit obligations at year end: | ||
Discount rate | 3.30% | 3.30% |
Assumptions used to determine net periodic benefit cost: | ||
Discount rate | 2.90% | 4.00% |
Benefit Plans 5 (Details) $ in Thousands |
12 Months Ended |
---|---|
Jun. 30, 2017
USD ($)
| |
One-Percentage Point Change in Assumed Health Care Cost Trend Rates | |
Effect on total service and interest cost components of periodic expense (Increase) | $ 15 |
Effect on total service and interest cost components of periodic expense (Decrease) | (12) |
Effect on postretirement benefit obligation (Increase) | 159 |
Effect on postretirement benefit obligation (Decrease) | $ (135) |
Benefit Plans 7 (Details) $ in Thousands |
Jun. 30, 2017
USD ($)
|
---|---|
Pension Benefits [Member] | |
Estimated future benefit payments | |
2018 | $ 3,200 |
2019 | 3,700 |
2020 | 3,800 |
2021 | 1,300 |
2022 | 1,300 |
2023 through 2027 | 4,400 |
Postretirement Health Coverage [Member] | |
Estimated future benefit payments | |
2018 | 190 |
2019 | 150 |
2020 | 130 |
2021 | 120 |
2022 | 110 |
2023 through 2027 | $ 480 |
Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Minimum Annual Rental Commitments Under Non Cancelable Operating Leases | |||
2018 | $ 29,000 | ||
2019 | 22,700 | ||
2020 | 15,300 | ||
2021 | 8,200 | ||
2022 | 5,300 | ||
Thereafter | 14,600 | ||
Total minimum lease payments | 95,100 | ||
Leases (Textuals) [Abstract] | |||
Rental expenses of operating leases | 35,900 | $ 37,300 | $ 39,300 |
Related Party Transaction, Expenses from Transactions with Related Party | $ 2,400 | $ 3,800 | $ 3,100 |
Segment and Geographic Information 2 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Net sales by product category | |||
Net Sales | $ 2,593,746 | $ 2,519,428 | $ 2,751,561 |
Industrial [Member] | |||
Net sales by product category | |||
Net Sales | 1,855,437 | 1,836,484 | 2,013,447 |
Fluid Power [Member] | |||
Net sales by product category | |||
Net Sales | $ 738,309 | $ 682,944 | $ 738,114 |
Segment and Geographic Information 3 (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | $ 2,593,746 | $ 2,519,428 | $ 2,751,561 |
Long-Lived Assets | 271,631 | 299,005 | 303,275 |
United States [Member] | |||
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | 2,182,552 | 2,117,485 | 2,238,263 |
Long-Lived Assets | 207,126 | 225,538 | 217,597 |
Canada [Member] | |||
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | 251,999 | 257,797 | 358,580 |
Long-Lived Assets | 57,947 | 66,304 | 76,565 |
Other Countries [Member] | |||
Revenues From External Customers and Long Lived Assets [Line Items] | |||
Net Sales | 159,195 | 144,146 | 154,718 |
Long-Lived Assets | $ 6,558 | $ 7,163 | $ 9,113 |
Segment and Geographic Information Textuals (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Segment Reporting Information [Line Items] | |||
Revenue, Net | $ 2,593,746 | $ 2,519,428 | $ 2,751,561 |
Intersegment Eliminations [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue, Net | $ 23,704 | $ 21,485 | $ 24,087 |
Other (Income) Expense, Net (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Other (income) expense, net | |||
Unrealized gain on assets held in rabbi trust for a non-qualified deferred compensation plan | $ (1,188) | $ (87) | $ (442) |
Foreign currency transaction losses | 209 | 1,039 | 1,251 |
Other, net | (62) | (108) | (70) |
Total other (income) expense, net | $ (917) | $ 1,060 | $ 879 |
Subsequent Event Subsequent Events (Details) - DICOFASA [Member] - Subsequent Event [Member] $ in Thousands |
Jul. 03, 2017
USD ($)
|
---|---|
Subsequent Event [Line Items] | |
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% |
Business Combination, Consideration Transferred | $ 5,898 |
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2015 |
||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||||
Deductions from reserves | $ 1,019 | |||||||
Allowance for Doubtful Accounts [Member] | ||||||||
Movement in Valuation Allowances and Reserves [Roll Forward] | ||||||||
Balance at beginning of period | 11,034 | $ 10,621 | $ 10,385 | |||||
Additions charged to costs and expenses | 2,071 | 4,303 | 2,597 | |||||
Additions (Deductions) Charged to Other Accounts | [1] | (133) | (46) | 231 | ||||
Deductions from reserves | [2] | 3,344 | 3,844 | 2,592 | ||||
Balance at end of period | $ 9,628 | $ 11,034 | $ 10,621 | |||||
|
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