Document_And_Entity_Informatio
Document And Entity Information | 9 Months Ended |
Apr. 30, 2014 | |
Document And Entity Information [Abstract] | ' |
Document Type | '10-Q |
Amendment Flag | 'false |
Document Period End Date | 30-Apr-14 |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q3 |
Entity Registrant Name | 'DONALDSON CO INC |
Entity Central Index Key | '0000029644 |
Current Fiscal Year End Date | '--07-31 |
Entity Filer Category | 'Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 142,955,040 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements Of Earnings (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Condensed Consolidated Statements Of Earnings [Abstract] | ' | ' | ' | ' |
Net sales | $624,234 | $619,371 | $1,805,240 | $1,804,354 |
Cost of sales | 400,773 | 397,870 | 1,165,737 | 1,185,583 |
Gross profit | 223,461 | 221,501 | 639,503 | 618,771 |
Operating expenses | 130,727 | 122,914 | 382,914 | 375,455 |
Operating income | 92,734 | 98,587 | 256,589 | 243,316 |
Interest expense | 2,374 | 2,719 | 6,987 | 8,275 |
Other income, net | -3,822 | -3,608 | -10,249 | -11,962 |
Earnings before income taxes | 94,182 | 99,476 | 259,851 | 247,003 |
Income taxes | 26,846 | 29,634 | 72,583 | 72,235 |
Net earnings | $67,336 | $69,842 | $187,268 | $174,768 |
Weighted average shares - basic | 145,310,710 | 148,136,620 | 146,543,727 | 148,404,503 |
Weighted average shares - diluted | 147,339,425 | 150,234,445 | 148,608,748 | 150,591,003 |
Net earnings per share - basic | $0.46 | $0.47 | $1.28 | $1.18 |
Net earnings per share - diluted | $0.46 | $0.46 | $1.26 | $1.16 |
Dividends paid per share | $0.14 | $0.10 | $0.41 | $0.28 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements Of Comprehensive Income (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Condensed Consolidated Statements Of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net earnings | $67,336 | $69,842 | $187,268 | $174,768 |
Foreign currency translation gain (loss) | 21,291 | -13,563 | 16,183 | 29,401 |
Net gain on hedging derivatives, net of deferred taxes of ($72), ($72), ($33) and ($269), respectively | 117 | 13 | 53 | 144 |
Pension and postretirement liability adjustment, net of deferred taxes of $4,691, $7,682, $9,063 and $14,963, respectively | 8,607 | 16,214 | 15,877 | 31,417 |
Total comprehensive income | $97,351 | $72,506 | $219,381 | $235,730 |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements Of Comprehensive Income (Parenthetical) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Condensed Consolidated Statements Of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Gain on hedging derivatives, deferred taxes | ($72) | ($72) | ($33) | ($269) |
Pension and postretirement liability adjustment, deferred taxes | $4,691 | $7,682 | $9,063 | $14,963 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Apr. 30, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets | ' | ' |
Cash and cash equivalents | $238,222 | $224,138 |
Short-term investments | 152,544 | 99,750 |
Accounts receivable, less allowance of $7,100 and $7,040 | 453,151 | 430,766 |
Inventories | 254,213 | 234,820 |
Prepaids and other current assets | 69,465 | 66,188 |
Total current assets | 1,167,595 | 1,055,662 |
Property, plant, and equipment, at cost | 1,091,111 | 1,025,013 |
Less accumulated depreciation | -650,114 | -605,733 |
Property, plant, and equipment, net | 440,997 | 419,280 |
Goodwill | 168,144 | 165,568 |
Intangible assets, net | 37,508 | 41,307 |
Other assets and deferred taxes | 83,757 | 61,739 |
Total assets | 1,898,001 | 1,743,556 |
Current liabilities | ' | ' |
Short-term borrowings | 65,557 | 9,190 |
Current maturities of long-term debt | 17,729 | 98,664 |
Trade accounts payable | 192,631 | 186,460 |
Other current liabilities | 183,155 | 182,121 |
Total current liabilities | 459,072 | 476,435 |
Long-term debt | 227,751 | 102,774 |
Deferred income taxes | 31,876 | 23,604 |
Other long-term liabilities | 53,139 | 55,556 |
Total liabilities | 771,838 | 658,369 |
Shareholders' equity | ' | ' |
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued | ' | ' |
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued | 758,216 | 758,216 |
Retained earnings | 675,386 | 532,307 |
Stock compensation plans | 19,194 | 21,745 |
Accumulated other comprehensive loss | -5,360 | -37,473 |
Treasury stock at cost, 6,468,944 and 5,490,725 shares | -321,273 | -189,608 |
Total shareholders' equity | 1,126,163 | 1,085,187 |
Total liabilities and shareholders' equity | $1,898,001 | $1,743,556 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Apr. 30, 2014 | Jul. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheets [Abstract] | ' | ' |
Accounts receivable, allowance | $7,100 | $7,040 |
Preferred stock, par value | $1 | $1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $5 | $5 |
Common stock, shares authorized | 240,000,000 | 240,000,000 |
Common stock, shares issued | 151,643,194 | 151,643,194 |
Treasury stock, shares | 6,468,944 | 5,490,725 |
Condensed_Consolidated_Stateme3
Condensed Consolidated Statements Of Cash Flows (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 |
Operating Activities | ' | ' |
Net earnings | $187,268 | $174,768 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 50,245 | 48,527 |
Changes in operating assets and liabilities | -5,764 | -8,346 |
Tax benefit of equity plans | -8,119 | -9,483 |
Stock compensation plan expense | 9,474 | 7,363 |
Deferred taxes | -7,649 | -4,037 |
Loss on sale of business | 905 | ' |
Other, net | 3,746 | 8,597 |
Net cash provided by operating activities | 230,106 | 217,389 |
Investing Activities | ' | ' |
Net expenditures on property, plant, and equipment | -66,046 | -69,425 |
Purchases of short-term investments | -108,864 | -66,584 |
Proceeds from sale of short-term investments | 61,179 | 97,365 |
Net cash used in investing activities | -113,731 | -38,644 |
Financing Activities | ' | ' |
Purchase of treasury stock | -165,871 | -60,975 |
Proceeds from long-term debt | 125,000 | ' |
Repayments of long-term debt | -81,586 | -1,093 |
Change in short-term borrowings | 54,693 | -66,530 |
Dividends paid | -59,675 | -41,184 |
Tax benefit of equity plans | 8,119 | 9,483 |
Exercise of stock options | 13,035 | 12,131 |
Net cash used in financing activities | -106,285 | -148,168 |
Effect of exchange rate changes on cash | 3,994 | 7,622 |
Increase in cash and cash equivalents | 14,084 | 38,199 |
Cash and cash equivalents, beginning of year | 224,138 | 225,789 |
Cash and cash equivalents, end of period | $238,222 | $263,988 |
Basis_Of_Presentation
Basis Of Presentation | 9 Months Ended |
Apr. 30, 2014 | |
Basis Of Presentation [Abstract] | ' |
Basis Of Presentation | ' |
Note A – Basis of Presentation | |
The accompanying unaudited condensed consolidated financial statements of Donaldson Company, Inc. and its subsidiaries (the Company) have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S.) (U.S. GAAP) and the instructions to Form 10‑Q and Rule 10‑01 of Regulation S‑X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the three and nine month periods ended April 30, 2014 are not necessarily indicative of the results that may be expected for future periods. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2013. | |
Inventories
Inventories | 9 Months Ended | ||||
Apr. 30, 2014 | |||||
Inventories [Abstract] | ' | ||||
Inventories | ' | ||||
Note B – Inventories | |||||
The components of inventory as of April 30, 2014 and July 31, 2013 are as follows (thousands of dollars): | |||||
April 30, | July 31, | ||||
2014 | 2013 | ||||
Raw materials | $ 110,115 | $ 99,814 | |||
Work in process | 24,930 | 29,097 | |||
Finished products | 119,168 | 105,909 | |||
Total inventories | $ 254,213 | $ 234,820 | |||
Accounting_For_StockBased_Comp
Accounting For Stock-Based Compensation | 9 Months Ended | ||||||||||
Apr. 30, 2014 | |||||||||||
Accounting For Stock-Based Compensation [Abstract] | ' | ||||||||||
Accounting For Stock-Based Compensation | ' | ||||||||||
Note C – Accounting for Stock-Based Compensation | |||||||||||
Stock-based compensation expense is recognized using the fair-value method for all awards. In addition to granting stock options, the Company also granted reload options during the nine months ended April 30, 2014. A reload stock option is granted for the number of shares tendered as payment for the exercise price and tax withholding obligation upon the exercise of a stock option with a reload provision. The option price of the reload option is equal to the market price of the stock on the date of exercise of the original option and will expire on the same date as the original option which was exercised. The Company determined the fair value of its option awards using the Black-Scholes option pricing model. The following assumptions were used to value the options, including reload options which generally have a shorter contractual life, granted during the nine months ended April 30, 2014: range of 4 years to 8 years expected life; expected volatility range of 21.0 percent to 28.0 percent; risk-free interest rate range of 1.21 percent to 2.83 percent; and annual dividend yield of 1.4 percent. The expected life for options granted during the period represents the period of time that the options are expected to be outstanding based on the contractual life and historical data of option holder exercise and termination behavior. Expected volatilities are based upon historical volatility of the Company’s stock over a period at least equal to the expected life of each option grant. Option grants have exercise prices equal to the fair market value of the Company’s stock on the date of grant. The weighted average fair value of options granted during the nine months ended April 30, 2014 and 2013 was $11.51 per share and $8.37 per share, respectively. For the three and nine months ended April 30, 2014, the Company recorded pre-tax stock-based compensation expense associated with stock options of $2.2 million and $8.3 million, respectively, and recorded $0.7 million and $2.7 million, respectively of related tax benefit. For the three and nine months ended April 30, 2013, the Company recorded pre-tax stock-based compensation expense associated with stock options of $1.4 million and $6.9 million, respectively, and recorded $0.4 million and $2.2 million, respectively, of related tax benefit. | |||||||||||
The following table summarizes stock option activity during the nine months ended April 30, 2014: | |||||||||||
Options Outstanding | Weighted Average Exercise Price | ||||||||||
Outstanding at July 31, 2013 | 7,329,820 | $ 23.88 | |||||||||
Granted | 891,737 | 42.18 | |||||||||
Exercised | -930,225 | 18.63 | |||||||||
Canceled | -14,914 | 35.59 | |||||||||
Outstanding at April 30, 2014 | 7,276,418 | 26.76 | |||||||||
The total intrinsic value of options exercised during the nine months ended April 30, 2014 and 2013 was $19.8 million and $27.5 million, respectively. | |||||||||||
The following table summarizes information concerning outstanding and exercisable options as of April 30, 2014: | |||||||||||
Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | ||||||
$ 0.00 to $16.69 | 1,050,081 | 1.41 | $ 15.92 | 1,050,081 | $ 15.92 | ||||||
$16.70 to $22.69 | 2,207,951 | 4.37 | 19.13 | 2,207,951 | 19.13 | ||||||
$22.70 to $28.69 | 405,114 | 3.67 | 23.01 | 405,114 | 23.01 | ||||||
$28.70 to $34.69 | 1,854,574 | 7.50 | 31.58 | 1,266,367 | 30.59 | ||||||
$34.70 and above | 1,758,698 | 8.38 | 38.62 | 621,343 | 35.43 | ||||||
7,276,418 | 5.67 | 26.76 | 5,550,856 | 23.25 | |||||||
At April 30, 2014, the aggregate intrinsic value of options outstanding and exercisable was $111.7 million and $104.6 million, respectively. | |||||||||||
As of April 30, 2014, there was $9.3 million of total unrecognized compensation expense related to non-vested stock options granted under the 2010 Master Stock Incentive Plan. This unvested expense is expected to be recognized during the remainder of Fiscal Years 2014, 2015, 2016, and 2017. | |||||||||||
Net_Earnings_Per_Share
Net Earnings Per Share | 9 Months Ended | ||||||||
Apr. 30, 2014 | |||||||||
Net Earnings Per Share [Abstract] | ' | ||||||||
Net Earnings Per Share | ' | ||||||||
Note D – Net Earnings Per Share | |||||||||
The Company’s basic net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares. The Company’s diluted net earnings per share is computed by dividing net earnings by the weighted average number of outstanding common shares and common share equivalents relating to stock options and stock incentive plans. Certain outstanding options were excluded from the diluted net earnings per share calculations because their exercise prices were greater than the average market price of the Company’s common stock during those periods. For the three and nine months ended April 30, 2014, there were 855,242 and 877,802 options excluded from the diluted net earnings per share calculation. For the three and nine months ended April 30, 2013, there were 29,800 and 80,486 options excluded from the diluted net earnings per share calculation. | |||||||||
The following table presents information necessary to calculate basic and diluted net earnings per common share (thousands, except per share amounts): | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
April 30, | April 30, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
Weighted average shares - basic | 145,311 | 148,137 | 146,544 | 148,405 | |||||
Common share equivalents | 2,028 | 2,097 | 2,065 | 2,186 | |||||
Weighted average shares - diluted | 147,339 | 150,234 | 148,609 | 150,591 | |||||
Net earnings for basic and diluted earnings | |||||||||
per share computation | $ 67,336 | $ 69,842 | $ 187,268 | $ 174,768 | |||||
Net earnings per share - basic | $ 0.46 | $ 0.47 | $ 1.28 | $ 1.18 | |||||
Net earnings per share - diluted | $ 0.46 | $ 0.46 | $ 1.26 | $ 1.16 | |||||
Shareholders_Equity
Shareholders' Equity | 9 Months Ended |
Apr. 30, 2014 | |
Shareholders' Equity [Abstract] | ' |
Shareholders' Equity | ' |
Note E – Shareholders’ Equity | |
The Company’s Board of Directors authorized the repurchase of 15.0 million shares of common stock on September 25, 2013. During the three months ended April 30, 2014, the Company repurchased 2,400,000 shares for $99.5 million at an average price of $41.48 per share. During the nine months ended April 30, 2014, the Company repurchased 4,039,000 shares for $165.9 million at an average price of $41.07 per share. As of April 30, 2014, the Company had remaining authorization to repurchase up to 11.3 million shares. | |
On May 21, 2014, the Company’s Board of Directors declared a cash dividend in the amount of $0.165 per common share, payable to stockholders of record on June 6, 2014. The dividend will be paid on June 20, 2014. | |
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Loss | 9 Months Ended | ||||||||||
Apr. 30, 2014 | |||||||||||
Accumulated Other Comprehensive Loss [Abstract] | ' | ||||||||||
Accumulated Other Comprehensive Loss | ' | ||||||||||
Note F – Accumulated Other Comprehensive Loss | |||||||||||
In the first quarter of Fiscal 2014, the Company prospectively adopted guidance issued by the Financial Accounting Standards Board (FASB) that requires additional disclosure related to the impact of reclassification adjustments out of accumulated other comprehensive income or loss on net income. Changes in accumulated other comprehensive loss by component are as follows: | |||||||||||
(Thousands of dollars) | Foreign currency translation adjustment (a) | Pension benefits | Derivative financial instruments | Total | |||||||
Three Months Ended April 30, 2014: | |||||||||||
Balance as of January 31, 2014, net of tax | $ 45,303 | $ (80,442) | $ (236) | $ (35,375) | |||||||
Other comprehensive (loss) income before reclassifications and tax | 21,291 | 11,314 | 275 | $ 32,880 | |||||||
Tax benefit (expense) | - | -3,967 | -96 | $ (4,063) | |||||||
Other comprehensive (loss) income before reclassifications, net of tax | $ 21,291 | $ 7,347 | $ 179 | $ 28,817 | |||||||
Reclassifications, before tax | - | 1,985 | -86 | $ 1,899 | |||||||
Tax benefit (expense) | - | -725 | 24 | $ (701) | |||||||
Reclassifications, net of tax | - | 1,260 | (b) | -62 | 1,198 | ||||||
Other comprehensive (loss) income, net of tax | 21,291 | 8,607 | 117 | (c) | $ 30,015 | ||||||
Balance at April 30, 2014, net of tax | $ 66,594 | $ (71,835) | $ (119) | $ (5,360) | |||||||
Nine Months Ended April 30, 2014: | |||||||||||
Balance as of July 31, 2013, net of tax | $ 50,411 | $ (87,712) | $ (172) | $ (37,473) | |||||||
Other comprehensive (loss) income before reclassifications and tax | 15,356 | 18,436 | 336 | $ 34,128 | |||||||
Tax benefit (expense) | - | -6,725 | -117 | $ (6,842) | |||||||
Other comprehensive (loss) income before reclassifications, net of tax | $ 15,356 | $ 11,711 | $ 219 | $ 27,286 | |||||||
Reclassifications, before tax | 827 | 6,505 | -250 | $ 7,082 | |||||||
Tax benefit (expense) | - | -2,339 | 84 | $ (2,255) | |||||||
Reclassifications, net of tax | 827 | 4,166 | (b) | -166 | 4,827 | ||||||
Other comprehensive (loss) income, net of tax | 16,183 | 15,877 | 53 | (c) | $ 32,113 | ||||||
Balance at April 30, 2014, net of tax | $ 66,594 | $ (71,835) | $ (119) | $ (5,360) | |||||||
(a) Taxes are not provided on cumulative translation adjustments as substantially all translation adjustments relate to earnings that are intended to be indefinitely reinvested outside the U.S. Amounts were reclassified from accumulated other comprehensive loss to other income, net. | |||||||||||
(b) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note K) that were reclassified from accumulated other comprehensive loss to operating expenses or cost of sales. | |||||||||||
(c) Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net (see Note L). | |||||||||||
Segment_Reporting
Segment Reporting | 9 Months Ended | |||||||
Apr. 30, 2014 | ||||||||
Segment Reporting [Abstract] | ' | |||||||
Segment Reporting | ' | |||||||
Note G – Segment Reporting | ||||||||
The Company has two reportable segments, Engine Products and Industrial Products. Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments such as interest income and interest expense. The Company is an integrated enterprise, characterized by substantial intersegment cooperation, cost allocations, and sharing of assets. Therefore, the Company does not represent that these segments, if operated independently, would report the operating profit and other financial information shown below. Segment detail is summarized as follows (thousands of dollars): | ||||||||
Engine Products | Industrial Products | Corporate & Unallocated | Total Company | |||||
Three Months Ended April 30, 2014: | ||||||||
Net sales | $ 402,157 | $ 222,077 | $ - | $ 624,234 | ||||
Earnings before income taxes | 61,432 | 32,507 | 243 | 94,182 | ||||
Three Months Ended April 30, 2013: | ||||||||
Net sales | $ 383,314 | $ 236,057 | $ - | $ 619,371 | ||||
Earnings before income taxes | 65,680 | 37,555 | -3,759 | 99,476 | ||||
Nine Months Ended April 30, 2014: | ||||||||
Net sales | $ 1,160,948 | $ 644,292 | $ - | $ 1,805,240 | ||||
Earnings before income taxes | 170,799 | 91,682 | -2,630 | 259,851 | ||||
Assets | 890,639 | 552,533 | 454,829 | 1,898,001 | ||||
Nine Months Ended April 30, 2013: | ||||||||
Net sales | $ 1,107,814 | $ 696,540 | $ - | $ 1,804,354 | ||||
Earnings before income taxes | 152,129 | 102,709 | -7,835 | 247,003 | ||||
Assets | 815,604 | 539,151 | 402,853 | 1,757,608 | ||||
There were no Customers that accounted for over 10 percent of net sales for the three or nine months ended April 30, 2014 or 2013. There were no Customers that accounted for over 10 percent of gross accounts receivable as of April 30, 2014 or 2013. | ||||||||
Goodwill_And_Other_Intangible_
Goodwill And Other Intangible Assets | 9 Months Ended | ||||||
Apr. 30, 2014 | |||||||
Goodwill And Other Intangible Assets [Abstract] | ' | ||||||
Goodwill And Other Intangible Assets | ' | ||||||
Note H – Goodwill and Other Intangible Assets | |||||||
Goodwill is assessed for impairment annually, or more frequently if events or changes in circumstances indicate that the asset may be impaired. The Company performed an impairment assessment during the third quarter of Fiscal 2014. The impairment assessment in the third quarter indicated that the estimated fair values of the reporting units to which goodwill is assigned continued to significantly exceed the corresponding carrying values of the respective reporting units, including recorded goodwill and, as such, no impairment existed. Following is a reconciliation of goodwill for the nine months ended April 30, 2014 (thousands of dollars): | |||||||
Engine Products | Industrial Products | Total Goodwill | |||||
Balance as of July 31, 2013 | $ 72,321 | $ 93,247 | $ 165,568 | ||||
Foreign exchange translation | 331 | 2,245 | $ 2,576 | ||||
Balance as of April 30, 2014 | $ 72,652 | $ 95,492 | $ 168,144 | ||||
As of April 30, 2014, intangible assets were $37.5 million, a $3.8 million decrease from $41.3 million at July 31, 2013. The decrease in other intangible assets is primarily due to amortization of existing assets of $3.9 million, partially offset by foreign currency translation. There were no intangible asset additions during the nine months ended April 30, 2014. Expected amortization expense relating to existing intangible assets is as follows (in thousands): | |||||||
Fiscal Year | |||||||
Remaining 2014 | $ 1,291 | ||||||
2015 | $ 5,086 | ||||||
2016 | $ 5,084 | ||||||
2017 | $ 4,963 | ||||||
2018 | $ 3,481 | ||||||
2019 | $ 2,930 | ||||||
Thereafter | $ 14,606 | ||||||
Guarantees
Guarantees | 9 Months Ended |
Apr. 30, 2014 | |
Guarantees [Abstract] | ' |
Guarantees | ' |
Note I – Guarantees | |
The Company and Caterpillar Inc. equally own the shares of Advanced Filtration Systems Inc. (AFSI), an unconsolidated joint venture, and guarantee certain debt of the joint venture. As of April 30, 2014, AFSI had $29.0 million of outstanding debt, of which the Company guarantees half. The Company had $0.9 million and $0.7 million of income, respectively, from this equity method investment during the three months ended April 30, 2014 and 2013. The Company recorded $2.2 million and $1.4 million of earnings from this equity method investment for the nine months ended April 30, 2014 and 2013, respectively. During the three and nine months ended April 30, 2014 and 2013, the Company also recorded royalty income of $1.7 million and $5.0 million, respectively, and $1.4 million and $4.4 million, respectively, related to AFSI. | |
As of April 30, 2014, the Company had a contingent liability for standby letters of credit totaling $7.8 million that have been issued and are outstanding. The letters of credit guarantee payment to third parties in the event the Company is in breach of insurance contract terms as detailed in each letter of credit. At April 30, 2014, there were no amounts drawn upon these letters of credit. | |
Warranty
Warranty | 9 Months Ended | |||
Apr. 30, 2014 | ||||
Warranty [Abstract] | ' | |||
Warranty | ' | |||
Note J – Warranty | ||||
The Company estimates warranty expense using quantitative measures based on historical warranty claim experience and evaluation of specific Customer warranty issues. Following is a reconciliation of warranty reserves for the nine months ended April 30, 2014 and 2013 (thousands of dollars): | ||||
April 30, | ||||
2014 | 2013 | |||
Beginning balance | $ 10,526 | $ 10,905 | ||
Accruals for warranties issued during the reporting period | 2,274 | 5,479 | ||
Accruals related to pre-existing warranties (including changes in estimates) | -452 | -105 | ||
Less settlements made during the period | -3,270 | -3,538 | ||
Ending balance | $ 9,078 | $ 12,741 | ||
There were no significant specific warranty matters accrued for in the periods ended April 30, 2014 or 2013. The Company’s warranty matters are not expected to have a material impact on its results of operations, liquidity, or financial position. | ||||
Employee_Benefit_Plans
Employee Benefit Plans | 9 Months Ended | ||||||||
Apr. 30, 2014 | |||||||||
Employee Benefit Plans [Abstract] | ' | ||||||||
Employee Benefit Plans | ' | ||||||||
Note K – Employee Benefit Plans | |||||||||
The Company and certain of its international subsidiaries have defined benefit pension plans for many of their hourly and salaried employees. There are two types of U.S. plans. The first type of U.S. plan is a traditional defined benefit pension plan primarily for production employees. The second is a plan for salaried workers that provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit comprised of a percentage of current salary that varies with years of service, interest credits, and transition credits. The international plans generally provide pension benefits based on years of service and compensation level. | |||||||||
Net periodic pension costs for the Company’s pension plans include the following components: | |||||||||
Three Months Ended | Nine Months Ended | ||||||||
April 30, | April 30, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
(thousands of dollars) | |||||||||
Net periodic cost: | |||||||||
Service cost | $ 4,719 | $ 4,866 | $ 14,104 | $ 14,607 | |||||
Interest cost | 4,885 | 4,222 | 14,602 | 12,733 | |||||
Expected return on assets | -7,691 | -7,008 | -22,970 | -21,100 | |||||
Prior service cost and transition amortization | 147 | 162 | 443 | 482 | |||||
Actuarial loss amortization | 1,853 | 2,563 | 5,551 | 7,712 | |||||
Net periodic benefit cost | $ 3,913 | $ 4,805 | $ 11,730 | $ 14,434 | |||||
The Company’s general funding policy for its pension plans is to make at least the minimum contributions as required by applicable regulations. Additionally, the Company may elect to make additional contributions up to the maximum tax deductible contribution. For the nine months ended April 30, 2014, the Company made contributions of $2.7 million to its non-U.S. pension plans and $0.5 million to its U.S. pension plans. The minimum funding requirement for the Company’s U.S. plans for Fiscal 2014 is $12.1 million. Per the Pension Protection Act of 2006, this obligation can be met with existing credit balances that resulted from payments above the minimum obligation in prior years. The Company plans to utilize existing credit balances to meet the minimum obligation. The Company currently estimates that it will contribute an additional $2.9 million to its non-U.S. pension plans during the remainder of Fiscal 2014. | |||||||||
In July 2013, the Company adopted a sunset freeze on its U.S. salaried pension plan. Effective August 1, 2013, the plan was frozen to any Employees hired on or after August 1, 2013. Effective August 1, 2016, Employees hired prior to August 1, 2013, will no longer continue to accrue Company contribution credits under the plan. In July 2013, the Company also announced that Employees hired on or after August 1, 2013, are eligible for a 3.0 percent annual Company retirement contribution in addition to the Company’s 401(k) match. Effective August 1, 2016, Employees hired prior to August 1, 2013, will be eligible for the 3.0 percent annual Company retirement contribution. | |||||||||
Fair_Values
Fair Values | 9 Months Ended | |||
Apr. 30, 2014 | ||||
Fair Values [Abstract] | ' | |||
Fair Values | ' | |||
Note L – Fair Values | ||||
At April 30, 2014 and July 31, 2013, the Company’s financial instruments included cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings, long-term debt, and derivative contracts. The fair values of cash and cash equivalents, accounts receivable, accounts payable, and short-term borrowings approximated carrying values because of the short-term nature of these instruments, and are classified as Level 1 in the fair value hierarchy. As of April 30, 2014, the estimated fair value of long-term debt with fixed interest rates was $237.1 million compared to the carrying value of $225.0 million and the estimated fair value of short-term debt with fixed interest rates was $16.1 million compared to the carrying value of $16.1 million. The fair value is estimated by discounting projected cash flows using the rate that similar amounts of debt could currently be borrowed, which is classified as Level 2 in the fair value hierarchy. | ||||
Derivative contracts are reported at their fair values based on third-party quotes. The fair values of the Company’s financial assets and financial liabilities listed below reflect the amounts that would be received to sell the assets or paid to transfer the liabilities in an orderly transaction between market participants at the measurement date (exit price). The fair values are based on inputs other than quoted prices that are observable for the asset or liability. These inputs include foreign currency exchange rates and interest rates. The financial assets and financial liabilities are primarily valued using standard calculations and models that use as their basis readily observable market parameters. Industry standard data providers are the primary source for forward and spot rate information for both interest rates and currency rates. | ||||
The following summarizes the Company’s fair value of outstanding derivatives at April 30, 2014 and July 31, 2013 on the balance sheets (thousands of dollars): | ||||
Significant Other Observable Inputs | ||||
(Level 2)* | ||||
April 30, | July 31, | |||
2014 | 2013 | |||
Asset derivatives recorded under the caption Prepaids and other current assets | ||||
Foreign exchange contracts | $ 353 | $ 734 | ||
Liability derivatives recorded under the caption Other current liabilities | ||||
Foreign exchange contracts | $ (860) | $ (845) | ||
Forward exchange contracts - net liability position | $ (507) | $ (111) | ||
*Inputs to the valuation methodology of Level 2 assets include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. | ||||
The Company holds equity method investments which are classified in other assets in the condensed consolidated balance sheets. The aggregate carrying amount of these investments was $20.1 million as of April 30, 2014, and $18.8 million as of July 31, 2013. These equity method investments are measured at fair value on a nonrecurring basis. The fair value of the Company’s equity method investments has not been estimated as there have been no identified events or changes in circumstance that would have had an adverse impact on the value of these investments. In the event that these investments were required to be measured, these investments would fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value, as the investments are privately-held entities without quoted market prices. | ||||
Goodwill and intangible assets are assessed for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company’s goodwill and intangible assets are not recorded at fair value as there have been no events or circumstances that would have an adverse impact on the value of these assets. In the event that an impairment was recognized, the fair value would be classified within Level 3 of the fair value hierarchy. Refer to Note H for further discussion of the annual goodwill impairment analysis and carrying values of goodwill and other intangible assets. | ||||
The Company assesses the impairment of property, plant, and equipment whenever events or changes in circumstances indicate that the carrying amount of property, plant, and equipment assets may not be recoverable. There were no impairment charges recorded during the three or nine months ended April 30, 2014 or 2013. | ||||
Commitments_And_Contingencies
Commitments And Contingencies | 9 Months Ended |
Apr. 30, 2014 | |
Commitments And Contingencies [Abstract] | ' |
Commitments And Contingencies | ' |
Note M – Commitments and Contingencies | |
Litigation The Company records provisions with respect to identified claims or lawsuits when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Claims and lawsuits are reviewed quarterly and provisions are taken or adjusted to reflect the status of a particular matter. The Company believes the recorded reserves in its condensed consolidated financial statements are adequate in light of the probable and estimable outcomes. The recorded liabilities were not material to the Company’s financial position, results of operations, or liquidity, and the Company does not believe that any of the currently identified claims or litigation will materially affect its financial position, results of operations, or liquidity. | |
Debt_Issuance
Debt Issuance | 9 Months Ended |
Apr. 30, 2014 | |
Debt Issuance [Abstract] | ' |
Debt Issuance | ' |
Note N – Debt Issuance | |
On March 27, 2014, the Company issued $125 million of senior unsecured notes due March 27, 2024. The debt was issued at face value and bears interest payable semi-annually at an annual rate of interest of 3.72 percent. The proceeds from the notes were used to refinance existing debt and for general corporate purposes. The notes contain debt covenants specifically related to maintaining a certain leverage ratio as well as other covenants that, under certain circumstances, can restrict the Company’s ability to incur additional indebtedness, make investments and other restricted payments, create liens, and sell assets. As of April 30, 2014, the Company was in compliance with all such covenants. | |
Income_Taxes
Income Taxes | 9 Months Ended |
Apr. 30, 2014 | |
Income Taxes [Abstract] | ' |
Income Taxes | ' |
Note O – Income Taxes | |
The effective tax rate for the three and nine months ended April 30, 2014, was 28.5 percent and 27.9 percent, respectively. The effective tax rate for the three and nine months ended April 30, 2013, was 29.8 percent and 29.2 percent, respectively. The decrease in our effective tax rate for the three months ended April 30, 2014, was primarily due to changes to the mix of earnings between tax jurisdictions. The decrease in our effective tax rate for the nine months ended April 30, 2014, was primarily due to a tax benefit associated with the favorable settlement of a tax audit. This benefit was partially offset by a tax expense related to an intercompany dividend and non-recurring tax benefits recorded during the prior year nine-month period primarily related to the expiration of some statutes of limitations, the retroactive reinstatement of the Research and Experimentation Credit in the U.S., and the tax impact of foreign dividend distributions. | |
The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. With few exceptions, the Company is no longer subject to state and foreign income tax examinations by tax authorities for years before 2008. The United States Internal Revenue Service has completed examinations of the Company’s U.S. federal income tax returns through 2012. | |
At April 30, 2014, the total unrecognized tax benefits were $13.9 million and accrued interest and penalties on these unrecognized tax benefits were $1.1 million. The Company recognizes accrued interest related to unrecognized tax benefits in income tax expense. If the Company were to prevail on all unrecognized tax benefits recorded, substantially all of the unrecognized tax benefits would benefit the effective tax rate. With an average statute of limitations of about 5 years, up to $0.9 million of the unrecognized tax benefits could potentially expire in the next 12 month period unless extended by an audit. It is possible that quicker than expected settlement of either current or future audits and disputes would cause additional reversals of previously recorded reserves in the next 12 month period. Currently, the Company has approximately $0.2 million of unrecognized tax benefits that are in formal dispute with various taxing authorities related to transfer pricing and deductibility of expenses. Quantification of an estimated range and timing of future audit settlements cannot be made at this time. | |
New_Accounting_Standards_Recen
New Accounting Standards Recently Adopted | 9 Months Ended |
Apr. 30, 2014 | |
New Accounting Standards Recently Adopted [Abstract] | ' |
New Accounting Standards Recently Adopted | ' |
Note P – New Accounting Standards Recently Adopted | |
In February 2013, the FASB updated the disclosure requirements for accumulated other comprehensive income (AOCI). The updated guidance requires companies to disclose amounts reclassified out of AOCI by component. The updated guidance does not affect how net income or other comprehensive income are calculated or presented. The updated guidance was effective for the Company beginning in the first quarter of Fiscal 2014. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. For additional information, refer to Note F. | |
Inventories_Tables
Inventories (Tables) | 9 Months Ended | ||||
Apr. 30, 2014 | |||||
Inventories [Abstract] | ' | ||||
Components Of Inventory | ' | ||||
April 30, | July 31, | ||||
2014 | 2013 | ||||
Raw materials | $ 110,115 | $ 99,814 | |||
Work in process | 24,930 | 29,097 | |||
Finished products | 119,168 | 105,909 | |||
Total inventories | $ 254,213 | $ 234,820 | |||
Accounting_For_StockBased_Comp1
Accounting For Stock-Based Compensation (Tables) | 9 Months Ended | ||||||||||
Apr. 30, 2014 | |||||||||||
Accounting For Stock-Based Compensation [Abstract] | ' | ||||||||||
Summary Of Stock Option Activity | ' | ||||||||||
Options Outstanding | Weighted Average Exercise Price | ||||||||||
Outstanding at July 31, 2013 | 7,329,820 | $ 23.88 | |||||||||
Granted | 891,737 | 42.18 | |||||||||
Exercised | -930,225 | 18.63 | |||||||||
Canceled | -14,914 | 35.59 | |||||||||
Outstanding at April 30, 2014 | 7,276,418 | 26.76 | |||||||||
Summary Of Information Concerning Outstanding And Exercisable Options | ' | ||||||||||
Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | ||||||
$ 0.00 to $16.69 | 1,050,081 | 1.41 | $ 15.92 | 1,050,081 | $ 15.92 | ||||||
$16.70 to $22.69 | 2,207,951 | 4.37 | 19.13 | 2,207,951 | 19.13 | ||||||
$22.70 to $28.69 | 405,114 | 3.67 | 23.01 | 405,114 | 23.01 | ||||||
$28.70 to $34.69 | 1,854,574 | 7.50 | 31.58 | 1,266,367 | 30.59 | ||||||
$34.70 and above | 1,758,698 | 8.38 | 38.62 | 621,343 | 35.43 | ||||||
7,276,418 | 5.67 | 26.76 | 5,550,856 | 23.25 | |||||||
Net_Earnings_Per_Share_Tables
Net Earnings Per Share (Tables) | 9 Months Ended | ||||||||
Apr. 30, 2014 | |||||||||
Net Earnings Per Share [Abstract] | ' | ||||||||
Schedule Of Information Necessary To Calculate Basic And Diluted Net Earnings Per Common Share | ' | ||||||||
Three Months Ended | Nine Months Ended | ||||||||
April 30, | April 30, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
Weighted average shares - basic | 145,311 | 148,137 | 146,544 | 148,405 | |||||
Common share equivalents | 2,028 | 2,097 | 2,065 | 2,186 | |||||
Weighted average shares - diluted | 147,339 | 150,234 | 148,609 | 150,591 | |||||
Net earnings for basic and diluted earnings | |||||||||
per share computation | $ 67,336 | $ 69,842 | $ 187,268 | $ 174,768 | |||||
Net earnings per share - basic | $ 0.46 | $ 0.47 | $ 1.28 | $ 1.18 | |||||
Net earnings per share - diluted | $ 0.46 | $ 0.46 | $ 1.26 | $ 1.16 | |||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Loss (Tables) | 9 Months Ended | ||||||||||
Apr. 30, 2014 | |||||||||||
Accumulated Other Comprehensive Loss [Abstract] | ' | ||||||||||
Schedule Of Changes In Accumulated Other Comprehensive Loss | ' | ||||||||||
(Thousands of dollars) | Foreign currency translation adjustment (a) | Pension benefits | Derivative financial instruments | Total | |||||||
Three Months Ended April 30, 2014: | |||||||||||
Balance as of January 31, 2014, net of tax | $ 45,303 | $ (80,442) | $ (236) | $ (35,375) | |||||||
Other comprehensive (loss) income before reclassifications and tax | 21,291 | 11,314 | 275 | $ 32,880 | |||||||
Tax benefit (expense) | - | -3,967 | -96 | $ (4,063) | |||||||
Other comprehensive (loss) income before reclassifications, net of tax | $ 21,291 | $ 7,347 | $ 179 | $ 28,817 | |||||||
Reclassifications, before tax | - | 1,985 | -86 | $ 1,899 | |||||||
Tax benefit (expense) | - | -725 | 24 | $ (701) | |||||||
Reclassifications, net of tax | - | 1,260 | (b) | -62 | 1,198 | ||||||
Other comprehensive (loss) income, net of tax | 21,291 | 8,607 | 117 | (c) | $ 30,015 | ||||||
Balance at April 30, 2014, net of tax | $ 66,594 | $ (71,835) | $ (119) | $ (5,360) | |||||||
Nine Months Ended April 30, 2014: | |||||||||||
Balance as of July 31, 2013, net of tax | $ 50,411 | $ (87,712) | $ (172) | $ (37,473) | |||||||
Other comprehensive (loss) income before reclassifications and tax | 15,356 | 18,436 | 336 | $ 34,128 | |||||||
Tax benefit (expense) | - | -6,725 | -117 | $ (6,842) | |||||||
Other comprehensive (loss) income before reclassifications, net of tax | $ 15,356 | $ 11,711 | $ 219 | $ 27,286 | |||||||
Reclassifications, before tax | 827 | 6,505 | -250 | $ 7,082 | |||||||
Tax benefit (expense) | - | -2,339 | 84 | $ (2,255) | |||||||
Reclassifications, net of tax | 827 | 4,166 | (b) | -166 | 4,827 | ||||||
Other comprehensive (loss) income, net of tax | 16,183 | 15,877 | 53 | (c) | $ 32,113 | ||||||
Balance at April 30, 2014, net of tax | $ 66,594 | $ (71,835) | $ (119) | $ (5,360) | |||||||
(a) Taxes are not provided on cumulative translation adjustments as substantially all translation adjustments relate to earnings that are intended to be indefinitely reinvested outside the U.S. Amounts were reclassified from accumulated other comprehensive loss to other income, net. | |||||||||||
(b) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note K) that were reclassified from accumulated other comprehensive loss to operating expenses or cost of sales. | |||||||||||
(c) Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net (see Note L). | |||||||||||
Segment_Reporting_Tables
Segment Reporting (Tables) | 9 Months Ended | |||||||
Apr. 30, 2014 | ||||||||
Segment Reporting [Abstract] | ' | |||||||
Summary Of Segment Detail | ' | |||||||
Engine Products | Industrial Products | Corporate & Unallocated | Total Company | |||||
Three Months Ended April 30, 2014: | ||||||||
Net sales | $ 402,157 | $ 222,077 | $ - | $ 624,234 | ||||
Earnings before income taxes | 61,432 | 32,507 | 243 | 94,182 | ||||
Three Months Ended April 30, 2013: | ||||||||
Net sales | $ 383,314 | $ 236,057 | $ - | $ 619,371 | ||||
Earnings before income taxes | 65,680 | 37,555 | -3,759 | 99,476 | ||||
Nine Months Ended April 30, 2014: | ||||||||
Net sales | $ 1,160,948 | $ 644,292 | $ - | $ 1,805,240 | ||||
Earnings before income taxes | 170,799 | 91,682 | -2,630 | 259,851 | ||||
Assets | 890,639 | 552,533 | 454,829 | 1,898,001 | ||||
Nine Months Ended April 30, 2013: | ||||||||
Net sales | $ 1,107,814 | $ 696,540 | $ - | $ 1,804,354 | ||||
Earnings before income taxes | 152,129 | 102,709 | -7,835 | 247,003 | ||||
Assets | 815,604 | 539,151 | 402,853 | 1,757,608 | ||||
Goodwill_And_Other_Intangible_1
Goodwill And Other Intangible Assets (Tables) | 9 Months Ended | ||||||
Apr. 30, 2014 | |||||||
Goodwill And Other Intangible Assets [Abstract] | ' | ||||||
Reconciliation Of Goodwill | ' | ||||||
Engine Products | Industrial Products | Total Goodwill | |||||
Balance as of July 31, 2013 | $ 72,321 | $ 93,247 | $ 165,568 | ||||
Foreign exchange translation | 331 | 2,245 | $ 2,576 | ||||
Balance as of April 30, 2014 | $ 72,652 | $ 95,492 | $ 168,144 | ||||
Expected Amortization Expense Relating To Existing Intangible Assets | ' | ||||||
Fiscal Year | |||||||
Remaining 2014 | $ 1,291 | ||||||
2015 | $ 5,086 | ||||||
2016 | $ 5,084 | ||||||
2017 | $ 4,963 | ||||||
2018 | $ 3,481 | ||||||
2019 | $ 2,930 | ||||||
Thereafter | $ 14,606 | ||||||
Warranty_Tables
Warranty (Tables) | 9 Months Ended | |||
Apr. 30, 2014 | ||||
Warranty [Abstract] | ' | |||
Reconciliation Of Warranty Reserves | ' | |||
April 30, | ||||
2014 | 2013 | |||
Beginning balance | $ 10,526 | $ 10,905 | ||
Accruals for warranties issued during the reporting period | 2,274 | 5,479 | ||
Accruals related to pre-existing warranties (including changes in estimates) | -452 | -105 | ||
Less settlements made during the period | -3,270 | -3,538 | ||
Ending balance | $ 9,078 | $ 12,741 | ||
Employee_Benefit_Plans_Tables
Employee Benefit Plans (Tables) | 9 Months Ended | ||||||||
Apr. 30, 2014 | |||||||||
Employee Benefit Plans [Abstract] | ' | ||||||||
Components Of Net Periodic Pension Costs | ' | ||||||||
Three Months Ended | Nine Months Ended | ||||||||
April 30, | April 30, | ||||||||
2014 | 2013 | 2014 | 2013 | ||||||
(thousands of dollars) | |||||||||
Net periodic cost: | |||||||||
Service cost | $ 4,719 | $ 4,866 | $ 14,104 | $ 14,607 | |||||
Interest cost | 4,885 | 4,222 | 14,602 | 12,733 | |||||
Expected return on assets | -7,691 | -7,008 | -22,970 | -21,100 | |||||
Prior service cost and transition amortization | 147 | 162 | 443 | 482 | |||||
Actuarial loss amortization | 1,853 | 2,563 | 5,551 | 7,712 | |||||
Net periodic benefit cost | $ 3,913 | $ 4,805 | $ 11,730 | $ 14,434 | |||||
Fair_Values_Tables
Fair Values (Tables) | 9 Months Ended | |||
Apr. 30, 2014 | ||||
Fair Values [Abstract] | ' | |||
Fair Value Of Outstanding Derivatives In Consolidated Balance Sheets | ' | |||
Significant Other Observable Inputs | ||||
(Level 2)* | ||||
April 30, | July 31, | |||
2014 | 2013 | |||
Asset derivatives recorded under the caption Prepaids and other current assets | ||||
Foreign exchange contracts | $ 353 | $ 734 | ||
Liability derivatives recorded under the caption Other current liabilities | ||||
Foreign exchange contracts | $ (860) | $ (845) | ||
Forward exchange contracts - net liability position | $ (507) | $ (111) | ||
*Inputs to the valuation methodology of Level 2 assets include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. | ||||
Inventories_Details
Inventories (Details) (USD $) | Apr. 30, 2014 | Jul. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventories [Abstract] | ' | ' |
Raw materials | $110,115 | $99,814 |
Work in process | 24,930 | 29,097 |
Finished products | 119,168 | 105,909 |
Total inventories | $254,213 | $234,820 |
Accounting_For_StockBased_Comp2
Accounting For Stock-Based Compensation (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Per Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Annual dividend yield | ' | ' | 1.40% | ' |
Weighted average fair value for options granted, per share | ' | ' | $11.51 | $8.37 |
Pre-tax stock-based compensation expense | $2.20 | $1.40 | $8.30 | $6.90 |
Tax benefit associated with stock options | 0.7 | 0.4 | 2.7 | 2.2 |
Total intrinsic value of options exercised | ' | ' | 19.8 | 27.5 |
Aggregate intrinsic value of options outstanding | 111.7 | ' | 111.7 | ' |
Aggregate intrinsic value of options exercisable | 104.6 | ' | 104.6 | ' |
2010 Master Stock Incentive Plan [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Unrecognized compensation expense related to non-vested stock options granted | $9.30 | ' | $9.30 | ' |
Minimum [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Expected life | ' | ' | '4 years | ' |
Expected volatility | ' | ' | 21.00% | ' |
Risk-free interest rate | ' | ' | 1.21% | ' |
Maximum [Member] | ' | ' | ' | ' |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ' | ' | ' | ' |
Expected life | ' | ' | '8 years | ' |
Expected volatility | ' | ' | 28.00% | ' |
Risk-free interest rate | ' | ' | 2.83% | ' |
Accounting_For_StockBased_Comp3
Accounting For Stock-Based Compensation (Summary Of Stock Option Activity) (Details) (USD $) | 9 Months Ended | |
Apr. 30, 2014 | Jan. 31, 2014 | |
Accounting For Stock-Based Compensation [Abstract] | ' | ' |
Options Outstanding, Beginning Balance | 7,329,820 | 7,276,418 |
Options Outstanding, Granted | 891,737 | ' |
Options Outstanding, Exercised | -930,225 | ' |
Options Outstanding, Canceled | -14,914 | ' |
Options Outstanding, Ending Balance | 7,276,418 | 7,276,418 |
Weighted Average Exercise Price, Beginning Balance | $23.88 | ' |
Weighted Average Exercise Price, Granted | $42.18 | ' |
Weighted Average Exercise Price, Exercised | $18.63 | ' |
Weighted Average Exercise Price, Canceled | $35.59 | ' |
Weighted Average Exercise Price, Ending Balance | $26.76 | ' |
Accounting_For_StockBased_Comp4
Accounting For Stock-Based Compensation (Summary Of Information Concerning Outstanding And Exercisable Options) (Details) (USD $) | 6 Months Ended | 9 Months Ended | ||||||
Jan. 31, 2014 | Apr. 30, 2014 | Jul. 31, 2013 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | Apr. 30, 2014 | |
Range Of Exercise Prices $0.00 To $16.69 [Member] | Range Of Exercise Prices $16.70 To $22.69 [Member] | Range Of Exercise Prices $22.70 To $28.69 [Member] | Range Of Exercise Prices $28.70 To $34.69 [Member] | Range Of Exercise Prices $34.70 And Above [Member] | ||||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' |
Range of Exercise Prices, lower range | ' | ' | ' | $0 | $16.70 | $22.70 | $28.70 | $34.70 |
Range of Exercise Prices, upper range | ' | ' | ' | $16.69 | $22.69 | $28.69 | $34.69 | ' |
Number Outstanding | 7,276,418 | 7,276,418 | 7,329,820 | 1,050,081 | 2,207,951 | 405,114 | 1,854,574 | 1,758,698 |
Weighted Average Remaining Contractual Life (Years) | '5 years 8 months 1 day | ' | ' | '1 year 4 months 28 days | '4 years 4 months 13 days | '3 years 8 months 1 day | '7 years 6 months | '8 years 4 months 17 days |
Weighted Average Exercise Price | $26.76 | ' | ' | $15.92 | $19.13 | $23.01 | $31.58 | $38.62 |
Number Exercisable | 5,550,856 | ' | ' | 1,050,081 | 2,207,951 | 405,114 | 1,266,367 | 621,343 |
Weighted Average Exercise Price | $23.25 | ' | ' | $15.92 | $19.13 | $23.01 | $30.59 | $35.43 |
Net_Earnings_Per_Share_Narrati
Net Earnings Per Share (Narrative) (Details) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | |
Net Earnings Per Share [Abstract] | ' | ' | ' | ' |
Options excluded from the diluted net earnings per share calculation | 855,242 | 29,800 | 877,802 | 80,486 |
Net_Earnings_Per_Share_Schedul
Net Earnings Per Share (Schedule Of Information Necessary To Calculate Basic And Diluted Net Earnings Per Common Share) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Net Earnings Per Share [Abstract] | ' | ' | ' | ' |
Weighted average shares - basic | 145,310,710 | 148,136,620 | 146,543,727 | 148,404,503 |
Common share equivalents | 2,028,000 | 2,097,000 | 2,065,000 | 2,186,000 |
Weighted average shares - diluted | 147,339,425 | 150,234,445 | 148,608,748 | 150,591,003 |
Net earnings for basic and diluted earnings per share computation | $67,336 | $69,842 | $187,268 | $174,768 |
Net earnings per share - basic | $0.46 | $0.47 | $1.28 | $1.18 |
Net earnings per share - diluted | $0.46 | $0.46 | $1.26 | $1.16 |
Shareholders_Equity_Details
Shareholders' Equity (Details) (USD $) | 3 Months Ended | 9 Months Ended | 0 Months Ended | |
In Millions, except Share data, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2014 | Sep. 25, 2013 | 21-May-14 |
Subsequent Event [Member] | ||||
Class of Stock [Line Items] | ' | ' | ' | ' |
Common stock authorized for repurchase | ' | ' | 15,000,000 | ' |
Stock repurchased during the period, shares | 2,400,000 | 4,039,000 | ' | ' |
Stock repurchased during the period, value | $99.50 | $165.90 | ' | ' |
Average price per share | $41.48 | $41.07 | ' | ' |
Shares with remaining authorization for repurchase under stock repurchase plan | 11,300,000 | 11,300,000 | ' | ' |
Cash dividend declared per common share | ' | ' | ' | $0.17 |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Loss (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2014 | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Beginning Balance, net of tax | ($35,375) | ($37,473) | ||
Other comprehensive (loss) income before reclassifications and tax | 32,880 | 34,128 | ||
Tax benefit (expense) | -4,063 | -6,842 | ||
Other comprehensive (loss) income before reclassifications, net of tax | 28,817 | 27,286 | ||
Balance at January 31, 2014, net of tax | -5,360 | -5,360 | ||
Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Reclassifications, before tax | 1,899 | 7,082 | ||
Tax benefit (expense) | -701 | -2,255 | ||
Reclassifications, net of tax | 1,198 | 4,827 | ||
Other comprehensive (loss) income, net of tax | 30,015 | 32,113 | ||
Balance at January 31, 2014, net of tax | -5,360 | -5,360 | ||
Foreign Currency Translation Adjustment [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Beginning Balance, net of tax | 45,303 | [1] | 50,411 | [1] |
Other comprehensive (loss) income before reclassifications and tax | 21,291 | [1] | 15,356 | [1] |
Other comprehensive (loss) income before reclassifications, net of tax | 21,291 | [1] | 15,356 | [1] |
Foreign Currency Translation Adjustment [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Reclassifications, before tax | ' | 827 | [1] | |
Reclassifications, net of tax | ' | 827 | [1] | |
Other comprehensive (loss) income, net of tax | 21,291 | [1] | 16,183 | [1] |
Balance at January 31, 2014, net of tax | 66,594 | [1] | 66,594 | [1] |
Pension Benefits [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Beginning Balance, net of tax | -80,442 | -87,712 | ||
Other comprehensive (loss) income before reclassifications and tax | 11,314 | 18,436 | ||
Tax benefit (expense) | -3,967 | -6,725 | ||
Other comprehensive (loss) income before reclassifications, net of tax | 7,347 | 11,711 | ||
Pension Benefits [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Reclassifications, before tax | 1,985 | 6,505 | ||
Tax benefit (expense) | -725 | -2,339 | ||
Reclassifications, net of tax | 1,260 | [2] | 4,166 | [2] |
Other comprehensive (loss) income, net of tax | 8,607 | 15,877 | ||
Balance at January 31, 2014, net of tax | -71,835 | -71,835 | ||
Derivative Financial Instruments [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Beginning Balance, net of tax | -236 | -172 | ||
Other comprehensive (loss) income before reclassifications and tax | 275 | 336 | ||
Tax benefit (expense) | -96 | -117 | ||
Other comprehensive (loss) income before reclassifications, net of tax | 179 | 219 | ||
Derivative Financial Instruments [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member] | ' | ' | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ' | ' | ||
Reclassifications, before tax | -86 | -250 | ||
Tax benefit (expense) | 24 | 84 | ||
Reclassifications, net of tax | -62 | -166 | ||
Other comprehensive (loss) income, net of tax | 117 | [3] | 53 | [3] |
Balance at January 31, 2014, net of tax | ($119) | ($119) | ||
[1] | Taxes are not provided on cumulative translation adjustments as substantially all translation adjustments relate to earnings that are intended to be indefinitely reinvested outside the U.S. Amounts were reclassified from accumulated other comprehensive loss to other income, net. | |||
[2] | Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note K) that were reclassified from accumulated other comprehensive loss to operating expenses or cost of sales. | |||
[3] | Relates to foreign currency cash flow hedges that were reclassified from accumulated other comprehensive loss to other income, net (see Note L). |
Segment_Reporting_Narrative_De
Segment Reporting (Narrative) (Details) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | |
customer | customer | customer | customer | |
segment | ||||
Segment Reporting [Abstract] | ' | ' | ' | ' |
Number of reportable segments | ' | ' | 2 | ' |
Number of customers accounting for over 10% of net sales | 0 | 0 | 0 | 0 |
Number of customers accounting for over 10% of gross accounts receivable | 0 | 0 | 0 | 0 |
Segment_Reporting_Summary_Of_S
Segment Reporting (Summary Of Segment Detail) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | Jul. 31, 2013 |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | $624,234 | $619,371 | $1,805,240 | $1,804,354 | ' |
Earnings before income taxes | 94,182 | 99,476 | 259,851 | 247,003 | ' |
Assets | 1,898,001 | 1,757,608 | 1,898,001 | 1,757,608 | 1,743,556 |
Engine Products [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | 402,157 | 383,314 | 1,160,948 | 1,107,814 | ' |
Earnings before income taxes | 61,432 | 65,680 | 170,799 | 152,129 | ' |
Assets | 890,639 | 815,604 | 890,639 | 815,604 | ' |
Industrial Products [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Net sales | 222,077 | 236,057 | 644,292 | 696,540 | ' |
Earnings before income taxes | 32,507 | 37,555 | 91,682 | 102,709 | ' |
Assets | 552,533 | 539,151 | 552,533 | 539,151 | ' |
Corporate & Unallocated [Member] | ' | ' | ' | ' | ' |
Segment Reporting Information [Line Items] | ' | ' | ' | ' | ' |
Earnings before income taxes | 243 | -3,759 | -2,630 | -7,835 | ' |
Assets | $454,829 | $402,853 | $454,829 | $402,853 | ' |
Goodwill_And_Other_Intangible_2
Goodwill And Other Intangible Assets (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Jul. 31, 2013 | |
Goodwill And Other Intangible Assets [Abstract] | ' | ' | ' | ' |
Goodwill impairment | ' | $0 | ' | ' |
Intangible assets, net | 37,508,000 | ' | 37,508,000 | 41,307,000 |
Decrease of balance from intangible assets | 3,800,000 | ' | ' | ' |
Amortization of existing intangible assets | ' | ' | $3,900,000 | ' |
Goodwill_And_Other_Intangible_3
Goodwill And Other Intangible Assets (Reconciliation Of Goodwill) (Details) (USD $) | 9 Months Ended |
In Thousands, unless otherwise specified | Apr. 30, 2014 |
Goodwill [Line Items] | ' |
Beginning Balance | $165,568 |
Foreign exchange translation | 2,576 |
Ending Balance | 168,144 |
Engine Products [Member] | ' |
Goodwill [Line Items] | ' |
Beginning Balance | 72,321 |
Foreign exchange translation | 331 |
Ending Balance | 72,652 |
Industrial Products [Member] | ' |
Goodwill [Line Items] | ' |
Beginning Balance | 93,247 |
Foreign exchange translation | 2,245 |
Ending Balance | $95,492 |
Goodwill_And_Other_Intangible_4
Goodwill And Other Intangible Assets (Expected Amortization Expense Relating To Existing Intangible Assets) (Details) (USD $) | Apr. 30, 2014 |
In Thousands, unless otherwise specified | |
Goodwill And Other Intangible Assets [Abstract] | ' |
Remaining 2014 | $1,291 |
2015 | 5,086 |
2016 | 5,084 |
2017 | 4,963 |
2018 | 3,481 |
2019 | 2,930 |
Thereafter | $14,606 |
Guarantees_Details
Guarantees (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Guarantor Obligations [Line Items] | ' | ' | ' | ' |
Contingent liability for standby letters of credit, issued and outstanding | $7.80 | ' | $7.80 | ' |
Advanced Filtration Systems, Inc. [Member] | ' | ' | ' | ' |
Guarantor Obligations [Line Items] | ' | ' | ' | ' |
Outstanding debt of joint venture | 29 | ' | 29 | ' |
Joint venture investment earnings | 0.9 | 0.7 | 2.2 | 1.4 |
Royalty income | $1.70 | $1.40 | $5 | $4.40 |
Warranty_Details
Warranty (Details) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 |
Warranty [Abstract] | ' | ' |
Beginning balance | $10,526 | $10,905 |
Accruals for warranties issued during the reporting period | 2,274 | 5,479 |
Accruals related to pre-existing warranties (including changes in estimates) | -452 | -105 |
Less settlements made during the period | -3,270 | -3,538 |
Ending balance | $9,078 | $12,741 |
Employee_Benefit_Plans_Narrati
Employee Benefit Plans (Narrative) (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Apr. 30, 2014 |
agreement | |
Defined Benefit Plan Disclosure [Line Items] | ' |
Number of U.S. plans | 2 |
Employees Hired On Or After August 1, 2013 Will Be Eligible For Retirement Contribution [Member] | ' |
Defined Benefit Plan Disclosure [Line Items] | ' |
Annual Company retirement contribution in addition to 401 (k) match, percent | 3.00% |
Employees Hired Prior To August 1, 2013 Will Be Eligible For Retirement Contribution, Effective August 1, 2016 [Member] | ' |
Defined Benefit Plan Disclosure [Line Items] | ' |
Annual Company retirement contribution in addition to 401 (k) match, percent | 3.00% |
U.S. Pension Plans [Member] | ' |
Defined Benefit Plan Disclosure [Line Items] | ' |
Company contributions | 0.5 |
Estimated future contributions to pension plans | 12.1 |
Non-U.S. Pension Plans [Member] | ' |
Defined Benefit Plan Disclosure [Line Items] | ' |
Company contributions | 2.7 |
Additional future contribution towards pension plans | 2.9 |
Employee_Benefit_Plans_Compone
Employee Benefit Plans (Components Of Net Periodic Pension Costs) (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Employee Benefit Plans [Abstract] | ' | ' | ' | ' |
Service cost | $4,719 | $4,866 | $14,104 | $14,607 |
Interest cost | 4,885 | 4,222 | 14,602 | 12,733 |
Expected return on assets | -7,691 | -7,008 | -22,970 | -21,100 |
Prior service cost and transition amortization | 147 | 162 | 443 | 482 |
Actuarial loss amortization | 1,853 | 2,563 | 5,551 | 7,712 |
Net periodic benefit cost | $3,913 | $4,805 | $11,730 | $14,434 |
Fair_Values_Narrative_Details
Fair Values (Narrative) (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 | Jul. 31, 2013 | |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Aggregate carrying amount of equity method investments | $20,100,000 | ' | $20,100,000 | ' | $18,800,000 |
Impairment charges | 0 | 0 | 0 | 0 | ' |
Long-Term Debt [Member] | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Fair value of debt | 237,100,000 | ' | 237,100,000 | ' | ' |
Debt carrying amount | 225,000,000 | ' | 225,000,000 | ' | ' |
Short-Term Debt [Member] | ' | ' | ' | ' | ' |
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Fair value of debt | 16,100,000 | ' | 16,100,000 | ' | ' |
Debt carrying amount | $16,100,000 | ' | $16,100,000 | ' | ' |
Fair_Values_Fair_Value_Of_Outs
Fair Values (Fair Value Of Outstanding Derivatives In Consolidated Balance Sheets) (Details) (USD $) | Apr. 30, 2014 | Jul. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Fair Values [Abstract] | ' | ' | ||
Asset derivatives recorded under the caption Prepaids and other current assets, Foreign exchange contracts | $353 | [1] | $734 | [1] |
Liability derivatives recorded under the caption Other current liabilities, Foreign exchange contracts | -860 | [1] | -845 | [1] |
Forward exchange contracts - net liability position | ($507) | [1] | ($111) | [1] |
[1] | Inputs to the valuation methodology of Level 2 assets include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means. |
Debt_Issuance_Details
Debt Issuance (Details) (Senior Unsecured Notes [Member], USD $) | 9 Months Ended | |
Apr. 30, 2014 | Mar. 27, 2014 | |
Senior Unsecured Notes [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Senior unsecured notes, issued | ' | $125,000,000 |
Senior unsecured notes, due date | 27-Mar-24 | ' |
Senior unsecured notes, interest rate | ' | 3.72% |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Apr. 30, 2014 | Apr. 30, 2013 | Apr. 30, 2014 | Apr. 30, 2013 |
Income Taxes [Abstract] | ' | ' | ' | ' |
Effective tax rate | 28.50% | 29.80% | 27.90% | 29.20% |
Unrecognized tax benefits | $13.90 | ' | $13.90 | ' |
Accrued interest and penalties on unrecognized tax benefits | 1.1 | ' | 1.1 | ' |
Statute of limitations period, average, years | ' | ' | '5 years | ' |
Maximum possible reduction in amount of unrecognized tax benefits | ' | ' | 0.9 | ' |
Unrecognized tax benefits potential expiration period | ' | ' | '12 months | ' |
Unrecognized tax benefits in dispute with various taxing authorities | $0.20 | ' | $0.20 | ' |