Ohio | 34-0117420 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
One Applied Plaza, Cleveland, Ohio | 44115 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | [X] | Accelerated filer | [ ] | |||
Non-accelerated filer | [ ] | Smaller reporting company | [ ] | |||
Emerging growth company | [ ] | |||||
Page No. | ||||
Part I: | ||||
Item 1: | ||||
Item 2: | ||||
Item 3: | ||||
Item 4: | ||||
Part II: | ||||
Item 1: | ||||
Item 2: | ||||
Item 6: | ||||
PART I: | FINANCIAL INFORMATION |
ITEM I: | FINANCIAL STATEMENTS |
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
Net sales | $ | 864,515 | $ | 680,701 | ||||
Cost of sales | 612,662 | 488,277 | ||||||
Gross profit | 251,853 | 192,424 | ||||||
Selling, distribution and administrative expense, including depreciation | 185,514 | 140,587 | ||||||
Operating income | 66,339 | 51,837 | ||||||
Interest expense, net | 10,476 | 2,166 | ||||||
Other income, net | (239 | ) | (711 | ) | ||||
Income before income taxes | 56,102 | 50,382 | ||||||
Income tax expense | 7,164 | 16,661 | ||||||
Net income | $ | 48,938 | $ | 33,721 | ||||
Net income per share - basic | $ | 1.26 | $ | 0.87 | ||||
Net income per share - diluted | $ | 1.24 | $ | 0.86 | ||||
Cash dividends per common share | $ | 0.30 | $ | 0.29 | ||||
Weighted average common shares outstanding for basic computation | 38,714 | 38,932 | ||||||
Dilutive effect of potential common shares | 650 | 404 | ||||||
Weighted average common shares outstanding for diluted computation | 39,364 | 39,336 | ||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
Net income per the condensed statements of consolidated income | $ | 48,938 | $ | 33,721 | ||||
Other comprehensive income, before tax: | ||||||||
Foreign currency translation adjustments | 5,714 | 8,159 | ||||||
Post-employment benefits: | ||||||||
Reclassification of net actuarial gains and prior service cost into other income, net and included in net periodic pension costs | (75 | ) | (14 | ) | ||||
Unrealized loss on investment securities available for sale | — | (4 | ) | |||||
Cumulative effect of adopting accounting standard | (50 | ) | — | |||||
Total of other comprehensive income, before tax | 5,589 | 8,141 | ||||||
Income tax expense (benefit) related to items of other comprehensive income | 242 | (11 | ) | |||||
Other comprehensive income, net of tax | 5,347 | 8,152 | ||||||
Comprehensive income, net of tax | $ | 54,285 | $ | 41,873 | ||||
September 30, 2018 | June 30, 2018 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 56,408 | $ | 54,150 | ||||
Accounts receivable, less allowances of $14,332 and $13,566 | 565,462 | 548,811 | ||||||
Inventories | 431,658 | 422,069 | ||||||
Other current assets | 35,555 | 32,990 | ||||||
Total current assets | 1,089,083 | 1,058,020 | ||||||
Property, less accumulated depreciation of $179,972 and $175,300 | 119,781 | 121,343 | ||||||
Identifiable intangibles, net | 425,801 | 435,947 | ||||||
Goodwill | 647,529 | 646,643 | ||||||
Other assets | 23,494 | 23,788 | ||||||
TOTAL ASSETS | $ | 2,305,688 | $ | 2,285,741 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 241,885 | $ | 256,886 | ||||
Current portion of long term debt | 19,184 | 19,183 | ||||||
Compensation and related benefits | 62,995 | 73,370 | ||||||
Other current liabilities | 70,109 | 83,112 | ||||||
Total current liabilities | 394,173 | 432,551 | ||||||
Long-term debt | 953,216 | 944,522 | ||||||
Post-employment benefits | 9,212 | 11,985 | ||||||
Other liabilities | 78,281 | 81,720 | ||||||
TOTAL LIABILITIES | 1,434,882 | 1,470,778 | ||||||
Shareholders’ Equity | ||||||||
Preferred stock—no par value; 2,500 shares authorized; none issued or outstanding | — | — | ||||||
Common stock—no par value; 80,000 shares authorized; 54,213 shares issued; 38,754 and 38,703 outstanding, respectively | 10,000 | 10,000 | ||||||
Additional paid-in capital | 168,618 | 169,383 | ||||||
Retained Earnings | 1,181,683 | 1,129,678 | ||||||
Treasury shares—at cost (15,459 and 15,510 shares, respectively) | (404,619 | ) | (403,875 | ) | ||||
Accumulated other comprehensive loss | (84,876 | ) | (90,223 | ) | ||||
TOTAL SHAREHOLDERS’ EQUITY | 870,806 | 814,963 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 2,305,688 | $ | 2,285,741 | ||||
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
Cash Flows from Operating Activities | ||||||||
Net income | $ | 48,938 | $ | 33,721 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization of property | 4,981 | 3,927 | ||||||
Amortization of intangibles | 10,921 | 5,831 | ||||||
Amortization of stock options and appreciation rights | 651 | 577 | ||||||
Other share-based compensation expense | 1,043 | 778 | ||||||
Changes in operating assets and liabilities, net of acquisition | (53,184 | ) | (35,025 | ) | ||||
Other, net | (1,553 | ) | (369 | ) | ||||
Net Cash provided by Operating Activities | 11,797 | 9,440 | ||||||
Cash Flows from Investing Activities | ||||||||
Acquisition of businesses, net of cash acquired | — | (5,014 | ) | |||||
Property purchases | (3,173 | ) | (6,336 | ) | ||||
Proceeds from property sales | 77 | 283 | ||||||
Net Cash used in Investing Activities | (3,096 | ) | (11,067 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Net repayments under revolving credit facility | (19,500 | ) | — | |||||
Long-term debt borrowings | 175,000 | — | ||||||
Long-term debt repayments | (146,934 | ) | (839 | ) | ||||
Payment of debt issuance costs | (685 | ) | — | |||||
Purchases of treasury shares | — | (13,761 | ) | |||||
Dividends paid | (11,334 | ) | (11,327 | ) | ||||
Acquisition holdback payments | (219 | ) | (319 | ) | ||||
Taxes paid for shares withheld for equity awards | (3,203 | ) | (1,056 | ) | ||||
Net Cash used in Financing Activities | (6,875 | ) | (27,302 | ) | ||||
Effect of Exchange Rate Changes on Cash | 432 | 1,641 | ||||||
Increase (Decrease) in Cash and Cash Equivalents | 2,258 | (27,288 | ) | |||||
Cash and Cash Equivalents at Beginning of Period | 54,150 | 105,057 | ||||||
Cash and Cash Equivalents at End of Period | $ | 56,408 | $ | 77,769 | ||||
For the three months ended September 30, 2018 | ||||||||||||
As Reported | Adjustments | Balances without adoption of ASC 606 | ||||||||||
Net Sales | $ | 864,515 | $ | 3,312 | $ | 867,827 | ||||||
Cost of Sales | 612,662 | 2,404 | 615,066 | |||||||||
Gross Profit | 251,853 | 908 | 252,761 | |||||||||
Selling, Distribution and Administrative, including depreciation | 185,514 | 219 | 185,733 | |||||||||
Operating Income | 66,339 | 689 | 67,028 | |||||||||
Interest Expense, net | 10,476 | — | 10,476 | |||||||||
Other Income, net | (239 | ) | — | (239 | ) | |||||||
Income Before Income Taxes | 56,102 | 689 | 56,791 | |||||||||
Income Tax Expense | 7,164 | 172 | 7,336 | |||||||||
Net Income | $ | 48,938 | $ | 517 | $ | 49,455 | ||||||
As of September 30, 2018 | ||||||||||||
As Reported | Adjustments | Balances without adoption of ASC 606 | ||||||||||
Assets | ||||||||||||
Accounts Receivable, net | $ | 565,462 | $ | (10,393 | ) | $ | 555,069 | |||||
Inventories | 431,658 | 12,529 | 444,187 | |||||||||
Other Assets | 23,494 | 173 | 23,667 | |||||||||
Liabilities | ||||||||||||
Other Current Liabilities | 70,109 | 6,559 | 76,668 | |||||||||
Compensation and Related Benefits | 62,995 | (511 | ) | 62,484 | ||||||||
Other Liabilities | 78,281 | (827 | ) | 77,454 | ||||||||
Equity | ||||||||||||
Retained Earnings | $ | 1,181,683 | $ | (2,912 | ) | $ | 1,178,771 | |||||
Three Months Ended September 30, | |||||||||||||||||||
2018 | 2017 | ||||||||||||||||||
Service Center Based Distribution | Fluid Power & Flow Control | Total | Service Center Based Distribution | Fluid Power & Flow Control | Total | ||||||||||||||
Geographic Areas: | |||||||||||||||||||
United States | $ | 490,774 | $ | 256,649 | 747,423 | $ | 458,996 | $ | 108,549 | $ | 567,545 | ||||||||
Canada | 69,107 | — | 69,107 | 66,817 | — | $ | 66,817 | ||||||||||||
Other countries | 44,168 | 3,817 | 47,985 | 43,100 | 3,239 | $ | 46,339 | ||||||||||||
Total | $ | 604,049 | $ | 260,466 | $ | 864,515 | $ | 568,913 | $ | 111,788 | $ | 680,701 | |||||||
For the three months ended September 30, 2018 | ||||||||
Service Center Based Distribution | Fluid Power & Flow Control | Total | ||||||
General Industry | 35.8 | % | 44.0 | % | 38.3 | % | ||
Industrial Machinery | 9.2 | % | 21.4 | % | 12.9 | % | ||
Metals | 11.1 | % | 7.8 | % | 10.1 | % | ||
Food | 10.8 | % | 2.5 | % | 8.3 | % | ||
Oil & Gas | 9.6 | % | 2.1 | % | 7.3 | % | ||
Chem/Petrochem | 3.5 | % | 15.6 | % | 7.1 | % | ||
Forest Products | 8.7 | % | 2.6 | % | 6.9 | % | ||
Cement & Aggregate | 6.8 | % | 1.0 | % | 5.0 | % | ||
Transportation | 4.5 | % | 3.0 | % | 4.1 | % | ||
Total | 100.0 | % | 100.0 | % | 100.0 | % | ||
For the three months ended September 30, 2018 | ||||||||
Service Center Based Distribution | Fluid Power & Flow Control | Total | ||||||
Power Transmission | 32.8 | % | 1.5 | % | 23.3 | % | ||
Fluid Power | 14.0 | % | 37.6 | % | 21.1 | % | ||
General Maintenance; Hose Products | 27.6 | % | 4.7 | % | 20.8 | % | ||
Bearings, Linear & Seals | 25.6 | % | — | % | 17.9 | % | ||
Specialty Flow Control | — | % | 56.2 | % | 16.9 | % | ||
Total | 100.0 | % | 100.0 | % | 100.0 | % | ||
3. | BUSINESS COMBINATIONS |
Cash | $ | 11,141 | |
Accounts receivable | 80,836 | ||
Inventories | 47,325 | ||
Other current assets | 1,657 | ||
Property | 8,282 | ||
Identifiable intangible assets | 305,420 | ||
Goodwill | 439,164 | ||
Other assets | 775 | ||
Total assets acquired | $ | 894,600 | |
Accounts payable and accrued liabilities | 54,518 | ||
Other liabilities | 2,677 | ||
Deferred tax liabilities | 55,624 | ||
Net assets acquired | $ | 781,781 | |
Purchase price | $ | 784,281 | |
Reconciliation of fair value transferred: | |||
Working Capital Adjustments | (2,500 | ) | |
Total Consideration | $ | 781,781 | |
July 1, 2018 to September 30, 2018 | |||
Net sales | $ | 146,486 | |
Operating income | 11,552 | ||
Net income | 9,220 | ||
Pro forma, three months ended September 30: | 2017 | ||
Net sales | $ | 762,253 | |
Operating income | 54,017 | ||
Net income | 30,726 | ||
Diluted net income per share | $ | 0.78 | |
Service Center Based Distribution | Fluid Power & Flow Control | Total | |||||||||
Balance at July 1, 2017 | $ | 201,740 | $ | 4,395 | $ | 206,135 | |||||
Goodwill acquired during the period | 2,525 | 439,164 | 441,689 | ||||||||
Other, primarily currency translation | (1,181 | ) | — | (1,181 | ) | ||||||
Balance at June 30, 2018 | $ | 203,084 | $ | 443,559 | $ | 646,643 | |||||
Goodwill acquired during the period | — | — | — | ||||||||
Other, primarily currency translation | 886 | — | 886 | ||||||||
Balance at September 30, 2018 | $ | 203,970 | $ | 443,559 | $ | 647,529 | |||||
September 30, 2018 | Amount | Accumulated Amortization | Net Book Value | |||||||||
Finite-Lived Identifiable Intangibles: | ||||||||||||
Customer relationships | $ | 466,885 | $ | 134,284 | $ | 332,601 | ||||||
Trade names | 113,155 | 24,395 | 88,760 | |||||||||
Vendor relationships | 11,398 | 7,558 | 3,840 | |||||||||
Non-competition agreements | 2,763 | 2,163 | 600 | |||||||||
Total Identifiable Intangibles | $ | 594,201 | $ | 168,400 | $ | 425,801 | ||||||
June 30, 2018 | Amount | Accumulated Amortization | Net Book Value | |||||||||
Finite-Lived Identifiable Intangibles: | ||||||||||||
Customer relationships | $ | 465,691 | $ | 125,009 | $ | 340,682 | ||||||
Trade names | 112,939 | 22,454 | 90,485 | |||||||||
Vendor relationships | 11,425 | 7,382 | 4,043 | |||||||||
Non-competition agreements | 2,761 | 2,024 | 737 | |||||||||
Total Identifiable Intangibles | $ | 592,816 | $ | 156,869 | $ | 435,947 | ||||||
Three Months Ended September 30, 2018 | ||||||||||||||||
Foreign currency translation adjustment | Unrealized gain (loss) on securities available for sale | Post-employment benefits | Total Accumulated other comprehensive (loss) income | |||||||||||||
Balance at July 1, 2018 | $ | (87,974 | ) | $ | 50 | $ | (2,299 | ) | $ | (90,223 | ) | |||||
Other comprehensive income | 5,453 | — | — | 5,453 | ||||||||||||
Amounts reclassified from accumulated other comprehensive (loss) income | — | — | (56 | ) | (56 | ) | ||||||||||
Cumulative effect of adopting accounting standard | — | (50 | ) | — | (50 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 5,453 | (50 | ) | (56 | ) | 5,347 | ||||||||||
Balance at September 30, 2018 | $ | (82,521 | ) | $ | — | $ | (2,355 | ) | $ | (84,876 | ) | |||||
Three Months Ended September 30, 2017 | ||||||||||||||||
Foreign currency translation adjustment | Unrealized gain (loss) on securities available for sale | Post-employment benefits | Total Accumulated other comprehensive (loss) income | |||||||||||||
Balance at July 1, 2017 | $ | (79,447 | ) | $ | 21 | $ | (2,276 | ) | $ | (81,702 | ) | |||||
Other comprehensive income (loss) | 8,159 | (3 | ) | — | 8,156 | |||||||||||
Amounts reclassified from accumulated other comprehensive (loss) income | — | — | (4 | ) | (4 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 8,159 | (3 | ) | (4 | ) | 8,152 | ||||||||||
Balance at September 30, 2017 | $ | (71,288 | ) | $ | 18 | $ | (2,280 | ) | $ | (73,550 | ) | |||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||||
Pre-Tax Amount | Tax Expense (Benefit) | Net Amount | Pre-Tax Amount | Tax Benefit | Net Amount | |||||||||||||||||||
Foreign currency translation adjustments | $ | 5,714 | $ | 261 | $ | 5,453 | $ | 8,159 | $ | — | $ | 8,159 | ||||||||||||
Post-employment benefits: | ||||||||||||||||||||||||
Reclassification of net actuarial gains and prior service cost into SD&A expense and included in net periodic pension costs | (75 | ) | (19 | ) | (56 | ) | (14 | ) | (10 | ) | (4 | ) | ||||||||||||
Unrealized (loss) gain on investment securities available for sale | — | — | — | (4 | ) | (1 | ) | (3 | ) | |||||||||||||||
Cumulative effect of adopting accounting standard | (50 | ) | — | (50 | ) | — | — | — | ||||||||||||||||
Other comprehensive income | $ | 5,589 | $ | 242 | $ | 5,347 | $ | 8,141 | $ | (11 | ) | $ | 8,152 | |||||||||||
Pension Benefits | Retiree Health Care Benefits | |||||||||||||||
Three Months Ended September 30, | 2018 | 2017 | 2018 | 2017 | ||||||||||||
Components of net periodic cost: | ||||||||||||||||
Service cost | $ | 11 | $ | 31 | $ | 4 | $ | 5 | ||||||||
Interest cost | 174 | 183 | 13 | 13 | ||||||||||||
Expected return on plan assets | (133 | ) | (118 | ) | — | — | ||||||||||
Recognized net actuarial loss (gain) | 46 | 106 | (30 | ) | (39 | ) | ||||||||||
Amortization of prior service cost | — | 7 | (92 | ) | (92 | ) | ||||||||||
Net periodic cost (benefit) | $ | 98 | $ | 209 | $ | (105 | ) | $ | (113 | ) | ||||||
Three Months Ended | Service Center Based Distribution | Fluid Power & Flow Control | Total | |||||||||
September 30, 2018 | ||||||||||||
Net sales | $ | 604,049 | $ | 260,466 | $ | 864,515 | ||||||
Operating income for reportable segments | 62,809 | 30,880 | 93,689 | |||||||||
Assets used in business | 1,227,815 | 1,077,873 | 2,305,688 | |||||||||
Depreciation and amortization of property | 3,911 | 1,070 | 4,981 | |||||||||
Capital expenditures | 2,444 | 729 | 3,173 | |||||||||
September 30, 2017 | ||||||||||||
Net sales | $ | 568,913 | $ | 111,788 | $ | 680,701 | ||||||
Operating income for reportable segments | 59,247 | 13,202 | 72,449 | |||||||||
Assets used in business | 1,182,784 | 202,123 | 1,384,907 | |||||||||
Depreciation and amortization of property | 3,669 | 258 | 3,927 | |||||||||
Capital expenditures | 5,548 | 788 | 6,336 | |||||||||
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
Operating income for reportable segments | $ | 93,689 | $ | 72,449 | ||||
Adjustment for: | ||||||||
Intangible amortization—Service Center Based Distribution | 4,018 | 4,512 | ||||||
Intangible amortization—Fluid Power & Flow Control | 6,903 | 1,319 | ||||||
Corporate and other expense, net | 16,429 | 14,781 | ||||||
Total operating income | 66,339 | 51,837 | ||||||
Interest expense, net | 10,476 | 2,166 | ||||||
Other income, net | (239 | ) | (711 | ) | ||||
Income before income taxes | $ | 56,102 | $ | 50,382 | ||||
Three Months Ended | ||||||||
September 30, | ||||||||
2018 | 2017 | |||||||
Unrealized gain on assets held in rabbi trust for a non-qualified deferred compensation plan | $ | (342 | ) | $ | (368 | ) | ||
Foreign currency transactions loss (gain) | 27 | (311 | ) | |||||
Net other periodic post-employment (benefit) costs | (22 | ) | 60 | |||||
Other, net | 98 | (92 | ) | |||||
Total other income, net | $ | (239 | ) | $ | (711 | ) | ||
/s/ Deloitte & Touche LLP |
Cleveland, Ohio |
November 1, 2018 |
Index Reading | |||
Month | MCU | PMI | IP |
September 2018 | 78.1 | 59.8 | 104.8 |
August 2018 | 78.1 | 61.3 | 104.6 |
July 2018 | 77.9 | 58.1 | 104.3 |
Three Months Ended September 30, | Change in $'s Versus Prior Period - % Increase | ||||||||
As a Percent of Net Sales | |||||||||
2018 | 2017 | ||||||||
Net Sales | 100.0 | % | 100.0 | % | 27.0 | % | |||
Gross Profit | 29.1 | % | 28.3 | % | 30.9 | % | |||
Selling, Distribution & Administrative | 21.5 | % | 20.7 | % | 32.0 | % | |||
Operating Income | 7.7 | % | 7.6 | % | 28.0 | % | |||
Net Income | 5.7 | % | 5.0 | % | 45.1 | % | |||
Amount of change due to | ||||||||||||||||||
Sales by Reportable Segment | Three months ended September 30, | Sales Increase | Foreign Currency | Organic Change | ||||||||||||||
2018 | 2017 | Acquisitions | ||||||||||||||||
Service Center Based Distribution | $ | 604.0 | $ | 568.9 | $ | 35.1 | $ | — | $ | (6.3 | ) | $ | 41.4 | |||||
Fluid Power & Flow Control | 260.5 | 111.8 | 148.7 | 146.5 | — | 2.2 | ||||||||||||
Total | $ | 864.5 | $ | 680.7 | $ | 183.8 | $ | 146.5 | $ | (6.3 | ) | $ | 43.6 | |||||
Amount of change due to | ||||||||||||||||||
Three months ended September 30, | Sales Increase | Foreign Currency | Organic Change | |||||||||||||||
Sales by Geographic Area | 2018 | 2017 | Acquisitions | |||||||||||||||
United States | $ | 747.4 | $ | 567.5 | $ | 179.9 | $ | 146.5 | $ | — | $ | 33.4 | ||||||
Canada | 69.1 | 66.8 | 2.3 | — | (2.7 | ) | 5.0 | |||||||||||
Other countries | 48.0 | 46.4 | 1.6 | — | (3.6 | ) | 5.2 | |||||||||||
Total | $ | 864.5 | $ | 680.7 | $ | 183.8 | $ | 146.5 | $ | (6.3 | ) | $ | 43.6 | |||||
Amount of change due to | ||||||||||||||||||
Three months ended September 30, | SD&A Increase | Foreign Currency | Organic Change | |||||||||||||||
2018 | 2017 | Acquisitions | ||||||||||||||||
SD&A | $ | 185.5 | $ | 140.6 | $ | 44.9 | $ | 38.0 | $ | (1.3 | ) | $ | 8.2 | |||||
Three Months Ended September 30, | ||||||||
Net Cash Provided by (Used in): | 2018 | 2017 | ||||||
Operating Activities | $ | 11,797 | $ | 9,440 | ||||
Investing Activities | (3,096 | ) | (11,067 | ) | ||||
Financing Activities | (6,875 | ) | (27,302 | ) | ||||
Exchange Rate Effect | 432 | 1,641 | ||||||
Increase (Decrease) in Cash and Cash Equivalents | $ | 2,258 | $ | (27,288 | ) | |||
September 30, | June 30, | |||||
2018 | 2018 | |||||
Accounts receivable, gross | $ | 579,794 | $ | 562,377 | ||
Allowance for doubtful accounts | 14,332 | 13,566 | ||||
Accounts receivable, net | $ | 565,462 | $ | 548,811 | ||
Allowance for doubtful accounts, % of gross receivables | 2.5 | % | 2.4 | % | ||
Three Months Ended September 30, | ||||||
2018 | 2017 | |||||
Provision for losses on accounts receivable | $ | 1,164 | $ | 719 | ||
Provision as a % of net sales | 0.13 | % | 0.11 | % | ||
PART II. | OTHER INFORMATION |
ITEM 1. | Legal Proceedings |
ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
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) |
July 1, 2018 to July 31, 2018 | 482 | $72.35 | 0 | 1,056,700 |
August 1, 2018 to August 31, 2018 | 0 | $0.00 | 0 | 1,056,700 |
September 1, 2018 to September 30, 2018 | 0 | $0.00 | 0 | 1,056,700 |
Total | 482 | $72.35 | 0 | 1,056,700 |
(1) | During the quarter the Company purchased 482 shares in connection with the Deferred Compensation Plan. |
(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. |
Exhibit No. | Description | |
3.1 | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3 | ||
4.4 | ||
4.5 | ||
4.6 | ||
10.1 | ||
10.2 | ||
15 | ||
31 | ||
32 | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Taxonomy Extension Schema Document | |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |
APPLIED INDUSTRIAL TECHNOLOGIES, INC. | ||
(Company) | ||
Date: | November 1, 2018 | By: /s/ Neil A.Schrimsher |
Neil A. Schrimsher | ||
President & Chief Executive Officer | ||
Date: | November 1, 2018 | By: /s/ David K. Wells |
David K. Wells | ||
Vice President-Chief Financial Officer & Treasurer | ||
• | Participants retiring at age 55 or older under an Applied retirement plan shall be eligible for a prorated award based on date of retirement (calculated using number of days’ participation in the Plan). |
• | Participants who incur a separation from service due to death or disability shall be eligible for a prorated award based on date of separation from service (calculated using number of days’ participation in the Plan). |
• | An award may be terminated or rescinded, and, if applicable, the participant may be required immediately to repay an award issued within the previous twelve months, if the Committee determines, in good faith, that during the participant’s employment with Applied or during the period ending twelve months following the participant’s separation from service, the participant has committed an act inimical to Applied’s interests. Acts inimical to Applied’s interest shall include willful inattention to duty; willful violation of Applied’s published policies; acts of fraud or dishonesty involving Applied’s business; solicitation of Applied’s employees, customers or vendors to terminate or alter their relationship with Applied to Applied’s detriment; unauthorized use or disclosure of information regarding Applied’s business, employees, customers, or vendors; and competition with Applied. All determinations by the Committee shall be effective at the time of the participant’s act. |
• | The Committee may, in its sole discretion, require a participant immediately to repay cash issued pursuant to the award within the previous 36 months (or any proceeds thereof) if (1) Applied restates its historical consolidated financial statements and (2) the Committee determines, in good faith, that (a) the restatement is a result of the participant’s, or another executive officer’s, willful misconduct that is unethical or illegal, and (b) the participant’s earnings pursuant to the award were based on materially inaccurate financial statements or materially inaccurate performance metrics that were invalidated by the restatement. |
1. | I have reviewed this quarterly report on Form 10-Q 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: November 1, 2018 | By: /s/ Neil A. Schrimsher |
Neil A. Schrimsher | |
President & Chief Executive Officer | |
1. | I have reviewed this quarterly report on Form 10-Q 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: November 1, 2018 | By: /s/ David K. Wells |
David K. Wells | |
Vice President-Chief Financial Officer & Treasurer | |
/s/ Neil A. Schrimsher | /s/ David K. Wells | |
Neil A. Schrimsher | David K. Wells | |
President & Chief Executive Officer | Vice President-Chief Financial Officer & Treasurer | |
Date: November 1, 2018 | ||
Document and Entity Information - shares |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Oct. 19, 2018 |
|
| Document and Entity Information [Abstract] | ||
| 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-Q | |
| Document Period End Date | Sep. 30, 2018 | |
| Document Fiscal Year Focus | 2019 | |
| Document Fiscal Period Focus | Q1 | |
| Amendment Flag | false | |
| Entity Common Stock, Shares Outstanding | 38,754,611 |
Condensed Statements of Consolidated Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Income Statement [Abstract] | ||
| Net Sales | $ 864,515 | $ 680,701 |
| Cost of Sales | 612,662 | 488,277 |
| Gross Profit | 251,853 | 192,424 |
| Selling, Distribution and Administrative, including depreciation | 185,514 | 140,587 |
| Operating Income | 66,339 | 51,837 |
| Interest expense, net | 10,476 | 2,166 |
| Other income, net | (239) | (711) |
| Income Before Income Taxes | 56,102 | 50,382 |
| Income Tax Expense | 7,164 | 16,661 |
| Net Income | $ 48,938 | $ 33,721 |
| Net Income Per Share - Basic | $ 1.26 | $ 0.87 |
| Net Income Per Share - Diluted | 1.24 | 0.86 |
| Cash dividends per common share | $ 0.30 | $ 0.29 |
| Weighted average common shares outstanding for basic computation | 38,714 | 38,932 |
| Dilutive effect of potential common shares | 650 | 404 |
| Weighted average common shares outstanding for diluted computation | 39,364 | 39,336 |
Condensed Statements of Consolidated Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Net income per the condensed statements of consolidated income | $ 48,938 | $ 33,721 |
| Other comprehensive income, before tax: | ||
| Foreign currency translation adjustments | 5,714 | 8,159 |
| Post-employment benefits: | ||
| Reclassification of net actuarial gains and prior service cost into other income, net and included in net periodic pension costs | (75) | (14) |
| Unrealized loss on investment securities available for sale | 0 | (4) |
| Cumulative effect of adopting accounting standard | (50) | 0 |
| Total of other comprehensive income, before tax | 5,589 | 8,141 |
| Income tax expense (benefit) related to items of other comprehensive income | 242 | (11) |
| Other comprehensive income, net of tax | 5,347 | 8,152 |
| Comprehensive income, net of tax | $ 54,285 | $ 41,873 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
|---|---|---|
| Current Assets: | ||
| Accounts Receivable, less allowances | $ 14,332 | $ 13,566 |
| Noncurrent Assets: | ||
| Property, less accumulated depreciation | $ 179,972 | $ 175,300 |
| Shareholders’ Equity | ||
| Preferred stock, par value | $ 0.00 | $ 0.00 |
| Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
| Preferred stock, shares issued | 0 | 0 |
| Preferred stock, shares outstanding | 0 | 0 |
| Common stock, par value | $ 0.00 | $ 0.00 |
| Common stock, shares authorized | 80,000,000 | 80,000,000 |
| Common stock, shares issued | 54,213,000 | 54,213,000 |
| Common stock, shares outstanding | 38,754,000 | 38,703,000 |
| Treasury shares | 15,459,000 | 15,510,000 |
Basis of Presentation |
3 Months Ended |
|---|---|
Sep. 30, 2018 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position of Applied Industrial Technologies, Inc. (the “Company”, or “Applied”) as of September 30, 2018, and the results of its operations and its cash flows for the three month periods ended September 30, 2018 and 2017, have been included. The condensed consolidated balance sheet as of June 30, 2018 has been derived from the audited consolidated financial statements at that date. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended June 30, 2018. Operating results for the three month period ended September 30, 2018 are not necessarily indicative of the results that may be expected for the remainder of the fiscal year ending June 30, 2019. Recently Adopted Accounting Guidance Revenue from Contracts with Customers In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"). The standard outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. 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." Subsequent to the issuance of ASU 2014-09, the FASB issued ASU 2015-14, ASU 2016-08, ASU 2016-10, and ASU 2016-12, which clarify the guidance in ASU 2014-09 but do not change the core principle of the revenue recognition model, and have been collectively codified into ASC 606. The provisions of ASC 606 are effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. On July 1, 2018, the Company adopted ASC 606 using the modified retrospective method. As a result, the Company applied ASC 606 only to contracts that were not completed as of July 1, 2018. The adoption of ASC 606 resulted in a net increase to opening retained earnings of approximately $3,429, net of tax, on July 1, 2018. See Note 2, Revenue Recognition, for further information on the impacts of these standard updates. Income tax consequences of intra-entity transfer of assets other than inventory 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 adopted ASU 2016-16 during the first quarter of fiscal 2019 using the modified retrospective method, and recorded a cumulative-effect adjustment decreasing retained earnings by $424, recording a deferred tax asset of $587 and reversing a prepaid asset of $1,011 as of the beginning of the period. The deferred tax asset is included in other assets on the condensed consolidated balance sheet as of September 30, 2018. Inventory The Company uses the LIFO method of valuing U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination. Recently Issued Accounting Guidance 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. In July 2018, the FASB issued ASU 2018-10 which clarifies the guidance in ASU 2016-02, and ASU 2018-11 which provides entities with an additional transition method option for adopting the new standard. The company plans to use this new transition method option upon adoption and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company has established a cross-functional team to evaluate the new standard and has begun implementing new lease administration software. The Company is still determining the financial impact that this standard update will have on its consolidated financial statements, but anticipates it will have a material impact on its assets and liabilities due to the addition of right-of-use assets and lease liabilities to the consolidated balance sheet. The Company will continue to evaluate the impacts of the adoption of the standard and these assessments are subject to change. 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 annual and interim 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 August 2018, the FASB issued its final standard on the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This standard, issued as ASU 2018-15, aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. |
Revenue Recognition Revenue Recognition |
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| Revenue Recognition [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Text Block] | REVENUE RECOGNITION The Company adopted ASC 606 - Revenue from Contracts with Customers using the modified retrospective method effective July 1, 2018. The Company completed an analysis of revenue streams at each of its business units and evaluated the impact of adopting ASC 606 on revenue recognition. The Company primarily sells purchased products and the majority of its revenue is recognized at a point in time. The cumulative effect of initially applying ASC 606 resulted in a net increase to the opening retained earnings balance of $3,429, net of tax, at July 1, 2018. The transition adjustment is comprised of two components. The first component is recognition of revenue from bill and hold arrangements. The second component is recognition of revenue from contracts that meet the criteria to recognize revenue over time as the underlying products have no alternative use and the Company has a right to payment for performance completed to date. Revenue for periods prior to July 1, 2018 has not been adjusted and continues to be reported under ASC Topic 605 - Revenue Recognition. Revenue Recognition The Company primarily sells purchased products distributed through its network of service centers and recognizes revenue at a point in time when control of the product transfers to the customer, typically upon shipment from an AIT facility or directly from a supplier. For products that ship directly from suppliers to customers, AIT acts as the principal in the transaction and recognizes revenue on a gross basis. Revenue recognized over time is not significant. Revenue is measured as the amount of consideration expected to be received in exchange for the products and services provided, net of allowances for product returns, variable consideration, and any taxes collected from customers that will be remitted to governmental authorities. Shipping and handling costs are recognized in net sales when they are billed to the customer. The Company has elected to account for shipping and handling activities as fulfillment costs. There are no significant costs associated with obtaining customer contracts. Payment terms with customers vary by the type and location of the customer and the products or services offered. The Company does not adjust the promised amount of consideration for the effects of significant financing components based on the expectation that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Arrangements with customers that include payment terms extending beyond one year are not significant. Accounts Receivable Accounts receivable are stated at their estimated net realizable value and consist of amounts billed or billable and currently due from customers. The Company maintains an allowance for doubtful accounts, which reflects management’s best estimate of probable losses based on an analysis of customer accounts, known troubled accounts, historical experience with write-offs, and other currently available evidence. Variable Consideration The Company’s products are generally sold with a right of return and may include variable consideration in the form of incentives, discounts, credits or rebates. Product returns are estimated based on historical return rates. The Company estimates and recognizes variable consideration based on historical experience to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to a customer. The Company records variable consideration as an adjustment to the transaction price in the period it is incurred. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. The following tables summarize the impacts of ASC 606 on the Company's condensed consolidated financial statements:
Disaggregation of Revenues The following table presents the Company's net sales by reportable segment and by geographic areas based on the location of the facility shipping the product. Other countries consist of Mexico, Australia, New Zealand, and Singapore.
The following table presents the Company’s percentage of revenue by reportable segment and major customer industry for the three months ended September 30, 2018:
The following table presents the Company’s percentage of revenue by reportable segment and product line for the three months ended September 30, 2018:
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combination Disclosure [Text Block] | 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. FCX Acquisition On January 31, 2018, the Company completed the acquisition of 100% of the outstanding shares of FCX Performance, Inc. (FCX), a Columbus, Ohio based distributor of specialty process flow control products and services. The total consideration transferred for the acquisition was $781,781, which was financed by cash-on-hand and a new credit facility comprised of a $780,000 Term Loan A and a $250,000 revolver, effective with the transaction closing. See Note 5 - Debt. As a distributor of engineered valves, instruments, pumps and lifecycle services to MRO (Maintenance, Repair & Operations) and OEM (Original Equipment Manufacturer) customers across diverse industrial and process end markets, this business is included in the Fluid Power & Flow Control Segment. The following table summarizes the consideration transferred, assets acquired, and liabilities assumed in connection with the acquisition of FCX based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment. The purchase accounting will be finalized within one year from the acquisition date.
Goodwill acquired of $160,814 is expected to be deductible for income tax purposes. Net sales, operating income and net income from the FCX acquisition included in the Company’s three months ended September 30, 2018 are as follows:
The following unaudited pro forma consolidated results of operations have been prepared as if the FCX acquisition (including the related acquisition costs) had occurred at the beginning of fiscal 2018:
These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results to reflect additional amortization that would have been recorded assuming the fair value adjustments to identified intangible assets had been applied as of July 1, 2017. In addition, pro forma adjustments have been made for the interest expense that would have been incurred as a result of the indebtedness used to finance the acquisitions. The pro forma net income amounts also incorporate an adjustment to the recorded income tax expense for the income tax effect of the pro forma adjustments described above. These pro forma results of operations do not include any anticipated synergies or other effects of the planned integration of FCX; accordingly, such pro forma adjustments do not purport to be indicative of the results of operations that actually would have resulted had the acquisitions occurred as of the date indicated or that may result in the future. Other Fiscal 2018 Acquisition On July 3, 2017, the Company acquired 100% of the outstanding stock of Diseño, Construcciones y Fabricaciones Hispanoamericanas, S.A. (DICOFASA), a distributor of accessories and components for hydraulic systems and lubrication, located in Puebla, Mexico. DICOFASA is included in the Service Center Based Distribution segment. The purchase price for the acquisition was $5,920, net tangible assets acquired were $3,395, and goodwill was $2,525 based upon estimated fair values at the acquisition date. The purchase price includes $906 of acquisition holdback payments, of which $219 was paid during the three months ended September 30, 2018. Due to changes in foreign currency exchange rates, the remaining balance is $660, which is included in other current liabilities and other liabilities on the condensed consolidated balance sheets as of September 30, 2018, and which will be paid on the second and third anniversaries of the acquisition date with interest at a fixed rate of 1.5% per annum. The Company funded this acquisition 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. |
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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 & Flow Control segment for the fiscal year ended June 30, 2018 and the three month period ended September 30, 2018 are as follows:
The Company has six (6) reporting units for which an annual goodwill impairment assessment was performed as of January 1, 2018. The Company concluded that all of the reporting units’ fair value exceeded their carrying amounts by at least 30% as of January 1, 2018. 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 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. At September 30, 2018 and June 30, 2018, 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 & Flow Control 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. Estimated future amortization expense by fiscal year (based on the Company’s identifiable intangible assets as of September 30, 2018) for the next five years is as follows: $33,200 for the remainder of 2019, $42,600 for 2020, $40,200 for 2021, $37,900 for 2022, $35,400 for 2023 and $31,100 for 2024. |
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Debt (Notes) |
3 Months Ended |
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Sep. 30, 2018 | |
| Debt Disclosure [Abstract] | |
| Debt Disclosure [Text Block] | DEBT Revolving Credit Facility & Term Loan In January 2018, in conjunction with the acquisition of FCX, the Company refinanced its existing credit facility and entered into a new five-year credit facility with a group of banks expiring in January 2023. This agreement provides for a $780,000 unsecured term loan and a $250,000 unsecured revolving credit facility. Fees on this facility range from 0.10% to 0.20% 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 September 30, 2018 and June 30, 2018, the Company had $628,250 and $775,125, respectively, outstanding under the term loan. The interest rate on the term loan as of September 30, 2018 and June 30, 2018 was 4.25% and 4.13%, respectively. The Company had no amount outstanding under the revolver at September 30, 2018, and $19,500 was outstanding under the revolver at June 30, 2018. Unused lines under this facility, net of outstanding letters of credit of $4,573 and $3,625, respectively, to secure certain insurance obligations, totaled $245,427 and $226,875 at September 30, 2018 and June 30, 2018, respectively, and were available to fund future acquisitions or other capital and operating requirements. The weighted average interest rate on the amount outstanding under the revolving credit facility as of June 30, 2018 was 3.93%. 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 September 30, 2018 and June 30, 2018, in order to secure certain insurance obligations. Trade Receivable Securitization Facility In August 2018, the Company established a trade receivable securitization facility (the “AR Securitization Facility”) with a termination date of August 31, 2021. The maximum availability under the AR Securitization Facility is $175,000. Availability is further subject to changes in the credit ratings of our customers, customer concentration levels or certain characteristics of the accounts receivable being transferred and, therefore, at certain times, we may not be able to fully access the $175,000 of funding available under the AR Securitization Facility. The AR Securitization Facility effectively increases the Company’s borrowing capacity by collateralizing a portion of the amount of the Service Center Based Distribution reportable segment’s U.S. operations’ trade accounts receivable. The collateralized trade accounts receivable is equal to the borrowed amount outstanding under the AR Securitization Facility and there were no restrictions on cash or other assets. The Company uses the proceeds from the AR Securitization Facility as an alternative to other forms of debt, effectively reducing borrowing costs. Borrowings under this facility carry variable interest rates tied to LIBOR and fees on the AR Securitization Facility are 0.90% per year. As of September 30, 2018, the Company has borrowed $175,000 under the AR Securitization Facility, and the interest rate was 2.08%. Other Long-Term Borrowings At September 30, 2018 and June 30, 2018, 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 September 30, 2018, $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 September 30, 2018 and June 30, 2018, $1,380 and $1,438 was outstanding, respectively. Unamortized debt issue costs of $551 are included as a reduction of current portion of long-term debt on the condensed consolidated balance sheets as of September 30, 2018 and June 30, 2018, respectively. Unamortized debt issue costs of $1,679 and $1,807 are included as a reduction of long-term debt on the condensed consolidated balance sheets as of September 30, 2018 and June 30, 2018, respectively. |
Fair Value Measurements |
3 Months Ended |
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Sep. 30, 2018 | |
| Fair Value Disclosures [Abstract] | |
| FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Marketable securities measured at fair value at September 30, 2018 and June 30, 2018 totaled $11,080 and $10,318, 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 accompanying condensed consolidated balance sheets and their fair values were determined using quoted market prices (Level 1 in the fair value hierarchy). As of September 30, 2018 and June 30, 2018, the carrying values of the Company's fixed interest rate debt outstanding under its unsecured shelf facility agreement with Prudential Investment Management approximated fair value (Level 2 in the fair value hierarchy). The revolving credit facility, the term loan and the AR Securitization Facility contain variable interest rates and their carrying values approximate fair value (Level 2 in the fair value hierarchy). |
Income Taxes (Notes) |
3 Months Ended |
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Sep. 30, 2018 | |
| Income Tax Disclosure [Abstract] | |
| Income Tax Disclosure [Text Block] | INCOME TAXES On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was enacted in the U.S., making significant changes to U.S. tax law. The Act reduced the U.S. federal corporate income tax rate from 35% to 21%, required companies to pay a one-time transition tax on certain un-remitted earnings of foreign subsidiaries that were previously tax deferred, generally eliminated U.S. federal income tax on dividends from foreign subsidiaries, and created new taxes on certain foreign-sourced earnings. During the three months ended September 30, 2018, the Company's estimated annual effective tax rate reflects the change in the federal statutory rate from 35% to 21%. The corporate income tax rate change had a favorable impact to the Company of $7,854 for the three months ended September 30, 2018. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Act for which the accounting under ASC 740 is incomplete. To the extent that a company's accounting for certain income tax effects of the Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply ASC 740 on the basis of the provisions of the tax laws that were in effect immediately before enactment of the Act. Accordingly, as of September 30, 2018, we have not completed our accounting for the tax effects of the Act. In fiscal 2018, we recognized a provisional tax liability of $3,877 related to the one-time transition tax on certain un-remitted earnings of foreign subsidiaries, which is payable over eight years. In the first quarter of fiscal 2019, the Company recorded an adjustment of $1,798 to reduce the provisional tax liability related to the one-time transition tax. We also recorded a tax benefit for $2,285 to increase the provisional foreign tax credit related to the transition tax. The new taxes and deductions related to certain foreign-sourced earnings recognized in the first quarter of fiscal 2019 resulted in a net provisional tax benefit of $169. We are still analyzing certain aspects of the Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. Overall, considering the decrease in the corporate income tax rate, the tax benefit related to the transition tax adjustment, and the new taxes and deductions related to certain foreign earnings, the Act resulted in a tax benefit of $12,106 for the three months ended September 30, 2018, which is included as a component of income tax expense in the condensed statements of consolidated income. |
Shareholders' Equity |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY Accumulated Other Comprehensive Loss Changes in the accumulated other comprehensive loss are comprised of the following amounts, shown net of taxes:
Other Comprehensive Income Details of other comprehensive income are as follows:
Anti-dilutive Common Stock Equivalents In the three month periods ended September 30, 2018 and 2017, respectively, stock options and stock appreciation rights related to 250 and 293 shares of common stock, were not included in the computation of diluted earnings per share for the periods then ended as they were anti-dilutive. |
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Benefit Plans |
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| Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BENEFIT PLANS | BENEFIT PLANS The following table provides summary disclosures of the net periodic post-employment costs recognized for the Company’s post-employment benefit plans:
The Company contributed $2,400 to its pension benefit plans and $55 to its retiree health care plans in the three months ended September 30, 2018. Expected contributions for the remainder of fiscal 2019 are $900 for the pension benefit plans to fund scheduled retirement payments and $165 for retiree health care plans. |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT INFORMATION In the first quarter of fiscal 2019, the Company performed a review of its management reporting structure and implemented changes to align with how the Company measures performance. As a result, the Company has revised its reportable segments to reflect how management currently reviews financial information and makes operating decisions. Certain supplier support benefits are now included within the Service Center Based Distribution segment operating income. Previously, these benefits were included in Corporate and other expense, net. All prior-period amounts have been adjusted to reflect the reportable segment change. The accounting policies of the Company’s reportable segments are generally the same as those used to prepare the condensed consolidated financial statements. Intercompany sales primarily from the Fluid Power & Flow Control segment to the Service Center Based Distribution segment of $6,916 and $6,091, in the three months ended September 30, 2018 and 2017, respectively, have been eliminated in the Segment Financial Information tables below.
Enterprise Resource Planning system (ERP) related assets are included within the Service Center Based Distribution segment. A reconciliation of operating income for reportable segments to the condensed consolidated income before income taxes is as follows:
The change in corporate and other income, net is due to changes in corporate expenses, as well as in the amounts and levels of certain expenses being allocated to the segments. The expenses being allocated include corporate charges for working capital, logistics support and other items. |
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Other (Income) Expense, Net |
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| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OTHER (INCOME) EXPENSE, NET | OTHER INCOME, NET Other income, net consists of the following:
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Basis of Presentation (Policies) |
3 Months Ended |
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Sep. 30, 2018 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| New Accounting Pronouncements and Changes in Accounting Principles [Text Block] | Recently Adopted Accounting Guidance Revenue from Contracts with Customers In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"). The standard outlines a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers. 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." Subsequent to the issuance of ASU 2014-09, the FASB issued ASU 2015-14, ASU 2016-08, ASU 2016-10, and ASU 2016-12, which clarify the guidance in ASU 2014-09 but do not change the core principle of the revenue recognition model, and have been collectively codified into ASC 606. The provisions of ASC 606 are effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted for annual periods beginning after December 15, 2016. On July 1, 2018, the Company adopted ASC 606 using the modified retrospective method. As a result, the Company applied ASC 606 only to contracts that were not completed as of July 1, 2018. The adoption of ASC 606 resulted in a net increase to opening retained earnings of approximately $3,429, net of tax, on July 1, 2018. See Note 2, Revenue Recognition, for further information on the impacts of these standard updates. Income tax consequences of intra-entity transfer of assets other than inventory 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 adopted ASU 2016-16 during the first quarter of fiscal 2019 using the modified retrospective method, and recorded a cumulative-effect adjustment decreasing retained earnings by $424, recording a deferred tax asset of $587 and reversing a prepaid asset of $1,011 as of the beginning of the period. The deferred tax asset is included in other assets on the condensed consolidated balance sheet as of September 30, 2018. |
| Inventory, Policy [Policy Text Block] | Inventory The Company uses the LIFO method of valuing U.S. inventories. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory determination. |
| Description of New Accounting Pronouncements Not yet Adopted [Text Block] | Recently Issued Accounting Guidance 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. In July 2018, the FASB issued ASU 2018-10 which clarifies the guidance in ASU 2016-02, and ASU 2018-11 which provides entities with an additional transition method option for adopting the new standard. The company plans to use this new transition method option upon adoption and recognize a cumulative-effect adjustment to the opening balance of retained earnings. The Company has established a cross-functional team to evaluate the new standard and has begun implementing new lease administration software. The Company is still determining the financial impact that this standard update will have on its consolidated financial statements, but anticipates it will have a material impact on its assets and liabilities due to the addition of right-of-use assets and lease liabilities to the consolidated balance sheet. The Company will continue to evaluate the impacts of the adoption of the standard and these assessments are subject to change. 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 annual and interim 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 August 2018, the FASB issued its final standard on the accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. This standard, issued as ASU 2018-15, aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted. The Company has not yet determined the impact of this pronouncement on its financial statements and related disclosures. |
Revenue Recognition Revenue Recognition (Policies) |
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Sep. 30, 2018 | |
| Revenue Recognition [Abstract] | |
| Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition The Company primarily sells purchased products distributed through its network of service centers and recognizes revenue at a point in time when control of the product transfers to the customer, typically upon shipment from an AIT facility or directly from a supplier. For products that ship directly from suppliers to customers, AIT acts as the principal in the transaction and recognizes revenue on a gross basis. Revenue recognized over time is not significant. Revenue is measured as the amount of consideration expected to be received in exchange for the products and services provided, net of allowances for product returns, variable consideration, and any taxes collected from customers that will be remitted to governmental authorities. Shipping and handling costs are recognized in net sales when they are billed to the customer. The Company has elected to account for shipping and handling activities as fulfillment costs. There are no significant costs associated with obtaining customer contracts. Payment terms with customers vary by the type and location of the customer and the products or services offered. The Company does not adjust the promised amount of consideration for the effects of significant financing components based on the expectation that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Arrangements with customers that include payment terms extending beyond one year are not significant. Accounts Receivable Accounts receivable are stated at their estimated net realizable value and consist of amounts billed or billable and currently due from customers. The Company maintains an allowance for doubtful accounts, which reflects management’s best estimate of probable losses based on an analysis of customer accounts, known troubled accounts, historical experience with write-offs, and other currently available evidence. Variable Consideration The Company’s products are generally sold with a right of return and may include variable consideration in the form of incentives, discounts, credits or rebates. Product returns are estimated based on historical return rates. The Company estimates and recognizes variable consideration based on historical experience to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to a customer. The Company records variable consideration as an adjustment to the transaction price in the period it is incurred. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. |
Revenue Recognition Revenue Recognition (Tables) |
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| Disaggregation of Revenue [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of New Accounting Pronouncements and Changes in Accounting Principles [Table Text Block] | The following tables summarize the impacts of ASC 606 on the Company's condensed consolidated financial statements:
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| Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area [Table Text Block] | The following table presents the Company's net sales by reportable segment and by geographic areas based on the location of the facility shipping the product. Other countries consist of Mexico, Australia, New Zealand, and Singapore.
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| Disaggregation of Revenue [Table Text Block] | The following table presents the Company’s percentage of revenue by reportable segment and product line for the three months ended September 30, 2018:
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| All Sectors [Domain] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disaggregation of Revenue [Table Text Block] | The following table presents the Company’s percentage of revenue by reportable segment and major customer industry for the three months ended September 30, 2018:
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Business Combinations Business Combinations (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 FCX based on their preliminary estimated fair values at the acquisition date, which are subject to adjustment. The purchase accounting will be finalized within one year from the acquisition date.
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| Schedule of Business Acquisitions, by Acquisition [Table Text Block] | Net sales, operating income and net income from the FCX acquisition included in the Company’s three months ended September 30, 2018 are as follows:
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| Business Acquisition, Pro Forma Information [Table Text Block] | The following unaudited pro forma consolidated results of operations have been prepared as if the FCX acquisition (including the related acquisition costs) had occurred at the beginning of fiscal 2018:
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Goodwill and Intangibles (Tables) |
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| Changes in the carrying amount of goodwill by reportable segment | The changes in the carrying amount of goodwill for both the Service Center Based Distribution segment and the Fluid Power & Flow Control segment for the fiscal year ended June 30, 2018 and the three month period ended September 30, 2018 are as follows:
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| Schedule of Intangible Assets | 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. |
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Shareholders' Equity (Tables) |
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| Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Accumulated Other Comprehensive Loss Changes in the accumulated other comprehensive loss are comprised of the following amounts, shown net of taxes:
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| Schedule of Comprehensive Income (Loss) [Table Text Block] | Other Comprehensive Income Details of other comprehensive income are as follows:
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Benefit Plans (Tables) |
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| Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net periodic costs | The following table provides summary disclosures of the net periodic post-employment costs recognized for the Company’s post-employment benefit plans:
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Segment Information (Tables) |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment financial information |
Enterprise Resource Planning system (ERP) related assets are included within the Service Center Based Distribution segment. |
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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 condensed consolidated income before income taxes is as follows:
The change in corporate and other income, net is due to changes in |
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Other (Income) Expense, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other (income) expense, net | Other income, net consists of the following:
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Revenue Recognition Revenue Recognition Textuals (Details 4) $ in Thousands |
3 Months Ended |
|---|---|
|
Sep. 30, 2018
USD ($)
| |
| Accounting Standards Update 2014-09 [Member] | |
| Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
| New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 3,429 |
Business Combinations Business Combinations (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2018 |
Jan. 31, 2018 |
Jun. 30, 2017 |
|
| Goodwill | $ 646,643 | $ 647,529 | $ 206,135 | |
| FCX Performance, Inc [Member] [Member] | ||||
| Cash | $ 11,141 | |||
| Accounts receivable | 80,836 | |||
| Inventories | 47,325 | |||
| Other current assets | 1,657 | |||
| Property | 8,282 | |||
| Identifiable intangible assets | 305,420 | |||
| Goodwill | 439,164 | |||
| Other assets | 775 | |||
| Total assets acquired | 894,600 | |||
| Accounts payable and accrued liabilities | 54,518 | |||
| Other liabilities | 2,677 | |||
| Deferred tax liabilities | 55,624 | |||
| Net assets acquired | 781,781 | |||
| Purchase price | $ 784,281 | |||
| Working Capital Adjustments | (2,500) | |||
| Total Consideration | $ 781,781 |
Business Combinations Business Combinations (Details 1) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Business Acquisition [Line Items] | ||
| Operating Income | $ 66,339 | $ 51,837 |
| FCX Performance, Inc [Member] [Member] | ||
| Business Acquisition [Line Items] | ||
| Net income | 9,220 | |
| FCX Performance, Inc [Member] [Member] | Sales [Member] | ||
| Business Acquisition [Line Items] | ||
| Net sales | 146,486 | |
| FCX Performance, Inc [Member] [Member] | Operating Income (Loss) [Member] | ||
| Business Acquisition [Line Items] | ||
| Operating Income | $ 11,552 | |
Business Combinations Business Combinations (Details 2) - FCX Performance, Inc [Member] [Member] $ / shares in Units, $ in Thousands |
12 Months Ended |
|---|---|
|
Jun. 30, 2018
USD ($)
$ / shares
| |
| Business Acquisition [Line Items] | |
| Net income | $ 30,726 |
| Diluted net income per share | $ / shares | $ 0.78 |
| Sales [Member] | |
| Business Acquisition [Line Items] | |
| Net sales | $ 762,253 |
| Operating Income (Loss) [Member] | |
| Business Acquisition [Line Items] | |
| Operating income | $ 54,017 |
Goodwill and Intangibles (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2018 |
Jun. 30, 2018 |
|
| Changes in the carrying amount of goodwill by reportable segment | ||
| Balance at beginning of period | $ 646,643 | $ 206,135 |
| Goodwill acquired during the period | 0 | 441,689 |
| Other, primarily currency translation | 886 | (1,181) |
| Balance at September 30, 2018 | 647,529 | 646,643 |
| Service Center Based Distribution Segment [Member] | ||
| Changes in the carrying amount of goodwill by reportable segment | ||
| Balance at beginning of period | 203,084 | 201,740 |
| Goodwill acquired during the period | 0 | 2,525 |
| Other, primarily currency translation | 886 | (1,181) |
| Balance at September 30, 2018 | 203,970 | 203,084 |
| Fluid Power Businesses Segment [Member] | ||
| Changes in the carrying amount of goodwill by reportable segment | ||
| Balance at beginning of period | 443,559 | 4,395 |
| Goodwill acquired during the period | 0 | 439,164 |
| Other, primarily currency translation | 0 | 0 |
| Balance at September 30, 2018 | $ 443,559 | $ 443,559 |
Goodwill and Intangibles (Details 1) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
|---|---|---|
| Amortization details resulting from business combinations | ||
| Amount | $ 594,201 | $ 592,816 |
| Accumulated Amortization | 168,400 | 156,869 |
| Net Book Value | 425,801 | 435,947 |
| Customer relationships | ||
| Amortization details resulting from business combinations | ||
| Amount | 466,885 | 465,691 |
| Accumulated Amortization | 134,284 | 125,009 |
| Net Book Value | 332,601 | 340,682 |
| Trade names | ||
| Amortization details resulting from business combinations | ||
| Amount | 113,155 | 112,939 |
| Accumulated Amortization | 24,395 | 22,454 |
| Net Book Value | 88,760 | 90,485 |
| Vendor relationships | ||
| Amortization details resulting from business combinations | ||
| Amount | 11,398 | 11,425 |
| Accumulated Amortization | 7,558 | 7,382 |
| Net Book Value | 3,840 | 4,043 |
| Non-competition agreements | ||
| Amortization details resulting from business combinations | ||
| Amount | 2,763 | 2,761 |
| Accumulated Amortization | 2,163 | 2,024 |
| Net Book Value | $ 600 | $ 737 |
Goodwill and Intangibles (Details Textuals) $ in Thousands |
12 Months Ended | |
|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2018
USD ($)
|
|
| Goodwill [Line Items] | ||
| Number of Reporting Units | 6 | |
| Reporting Unit, Percentage of Fair Value in Excess of Carrying Amount | 30.00% | |
| Goodwill and Intangibles (Textuals) [Abstract] | ||
| Amortization expense for the remainder of 2019 | $ 33,200 | |
| Amortization expense for 2020 | 42,600 | |
| Amortization expense for 2021 | 40,200 | |
| Amortization expense for 2022 | 37,900 | |
| Amortization expense for 2023 | 35,400 | |
| Amortization expense for 2024 | 31,100 | |
| Service Center Based Distribution Segment [Member] | ||
| Goodwill [Line Items] | ||
| Accumulated goodwill impairment losses | 64,794 | |
| Fluid Power Businesses Segment [Member] | ||
| Goodwill [Line Items] | ||
| Accumulated goodwill impairment losses | $ 36,605 |
Fair Value Measurements (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Jun. 30, 2018 |
|---|---|---|
| Level 1 [Member] | Recurring [Member] | ||
| Fair Value Measurements (Textuals) [Line Items] | ||
| Marketable securities | $ 11,080 | $ 10,318 |
Income Taxes Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2018 |
|
| Income Tax Disclosure [Abstract] | |||
| Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent | 21.00% | 35.00% | |
| Effective Income Tax Rate Reconciliation, Change in Enacted Tax Rate, Amount | $ 7,854 | ||
| Tax Cuts and Jobs Act - Transition tax amount | 1,798 | $ 3,877 | |
| Tax Cuts and Jobs Act - Foreign Tax credit | 2,285 | ||
| Tax Cuts and Jobs Act - Adjustment | 169 | ||
| Tax Cuts and Jobs Act - Net Tax Benefit | $ 12,106 | ||
Shareholders' Equity Shareholders Equity Details Textuals (Details) - shares shares in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Statement of Stockholders' Equity [Abstract] | ||
| Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 250 | 293 |
Benefit Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Pension Benefits [Member] | ||
| Components of net periodic cost: | ||
| Service cost | $ 11 | $ 31 |
| Interest cost | 174 | 183 |
| Expected return on plan assets | (133) | (118) |
| Recognized net actuarial loss (gain) | 46 | 106 |
| Amortization of prior service cost | 0 | 7 |
| Net periodic cost (benefit) | 98 | 209 |
| Postretirement Health Coverage [Member] | ||
| Components of net periodic cost: | ||
| Service cost | 4 | 5 |
| Interest cost | 13 | 13 |
| Expected return on plan assets | 0 | 0 |
| Recognized net actuarial loss (gain) | (30) | (39) |
| Amortization of prior service cost | (92) | (92) |
| Net periodic cost (benefit) | $ (105) | $ (113) |
Benefit Plans (Details Textuals) $ in Thousands |
3 Months Ended |
|---|---|
|
Sep. 30, 2018
USD ($)
| |
| Pension Plans, Defined Benefit [Member] | |
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
| Contribution to benefit plan | $ 2,400 |
| Expected contribution to benefit plans for remainder of fiscal year | 900 |
| Postretirement Health Coverage [Member] | |
| Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
| Contribution to benefit plan | 55 |
| Expected contribution to benefit plans for remainder of fiscal year | $ 165 |
Segment Information (Details Textuals) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Segment Reporting Information [Line Items] | ||
| Net Sales | $ 864,515 | $ 680,701 |
| Intersegment Eliminations [Member] | ||
| Segment Reporting Information [Line Items] | ||
| Net Sales | $ 6,916 | $ 6,091 |
Other (Income) Expense, Net (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
| Other Income and Expenses [Abstract] | ||
| Unrealized gain on assets held in rabbi trust for a non-qualified deferred compensation plan | $ (342) | $ (368) |
| Foreign currency transactions loss (gain) | 27 | (311) |
| Net other periodic post-employment (benefit) costs | (22) | 60 |
| Other, net | 98 | (92) |
| Total other income, net | $ (239) | $ (711) |