Statement Of Income
Statement Of Income (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Dec. 31, 2009 | 3 Months Ended
Dec. 31, 2008 | 6 Months Ended
Dec. 31, 2009 | 6 Months Ended
Dec. 31, 2008 |
Net sales | $2,354,708 | $2,688,656 | $4,591,873 | $5,753,344 |
Cost of sales | 1,869,481 | 2,121,450 | 3,670,426 | 4,458,672 |
Gross profit | 485,227 | 567,206 | 921,447 | 1,294,672 |
Selling, general and administrative expenses | 309,840 | 337,183 | 611,683 | 669,866 |
Interest expense | 25,029 | 30,307 | 50,752 | 58,403 |
Other expense, net | 8,123 | 483 | 2,748 | 8,782 |
Income before income taxes | 142,235 | 199,233 | 256,264 | 557,621 |
Income taxes | 37,272 | 42,472 | 77,331 | 149,025 |
Net income | 104,963 | 156,761 | 178,933 | 408,596 |
Less: Noncontrolling interests | 417 | 1,360 | 894 | 3,019 |
Net income attributable to common shareholders | $104,546 | $155,401 | $178,039 | $405,577 |
Earnings per share attributable to common shareholders: | ||||
Basic | 0.65 | 0.97 | 1.11 | 2.49 |
Diluted | 0.64 | 0.96 | 1.1 | 2.47 |
Cash dividends per common share | 0.25 | 0.25 | 0.5 | 0.5 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Dec. 31, 2009
| Jun. 30, 2009
|
Current assets: | ||
Cash and cash equivalents | $233,899 | $187,611 |
Accounts receivable, net | 1,368,449 | 1,417,305 |
Inventories: | ||
Finished products | 509,724 | 514,495 |
Work in process | 566,483 | 581,266 |
Raw materials | 156,772 | 158,789 |
Inventory, Net, Total | 1,232,979 | 1,254,550 |
Prepaid expenses | 98,989 | 142,335 |
Deferred income taxes | 124,182 | 121,980 |
Total current assets | 3,058,498 | 3,123,781 |
Plant and equipment | 4,785,143 | 4,705,060 |
Less accumulated depreciation | 2,942,393 | 2,824,506 |
Property, Plant and Equipment, Net, Total | 1,842,750 | 1,880,554 |
Goodwill | 2,948,304 | 2,903,077 |
Intangible assets, net | 1,254,982 | 1,273,862 |
Other assets | 689,655 | 674,628 |
Total assets | 9,794,189 | 9,855,902 |
Current liabilities: | ||
Notes payable | 389,715 | 481,467 |
Accounts payable, trade | 692,721 | 649,718 |
Accrued payrolls and other compensation | 261,835 | 356,776 |
Accrued domestic and foreign taxes | 153,152 | 113,107 |
Other accrued liabilities | 418,615 | 404,686 |
Total current liabilities | 1,916,038 | 2,005,754 |
Long-term debt | 1,554,088 | 1,839,705 |
Pensions and other postretirement benefits | 1,258,258 | 1,233,271 |
Deferred income taxes | 186,493 | 183,457 |
Other liabilities | 241,526 | 243,275 |
Total liabilities | 5,156,403 | 5,505,462 |
Shareholders' equity: | ||
Serial preferred stock, $.50 par value; authorized 3,000,000 shares; none issued | 0 | 0 |
Common stock, $.50 par value; authorized 600,000,000 shares; issued 181,046,128 shares at December 31 and June 30 | 90,523 | 90,523 |
Additional capital | 624,906 | 588,201 |
Retained earnings | 5,808,915 | 5,722,038 |
Accumulated other comprehensive (loss) | (705,524) | (843,019) |
Treasury shares, at cost; 20,246,697 shares at December 31 and 20,557,537 shares at June 30 | (1,266,793) | (1,289,544) |
Total shareholders' equity | 4,552,027 | 4,268,199 |
Noncontrolling interests | 85,759 | 82,241 |
Total equity | 4,637,786 | 4,350,440 |
Total liabilities and shareholders' equity | $9,794,189 | $9,855,902 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
Dec. 31, 2009
| Jun. 30, 2009
| |
Serial preferred stock, par value | 0.5 | 0.5 |
Serial preferred stock, authorized | 3,000,000 | 3,000,000 |
Serial preferred stock, issued | 0 | 0 |
Common stock, par value | 0.5 | 0.5 |
Common stock, authorized | 600,000,000 | 600,000,000 |
Common stock, issued | 181,046,128 | 181,046,128 |
Treasury shares, shares | 20,246,697 | 20,557,537 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Thousands | 6 Months Ended
Dec. 31, 2009 | 6 Months Ended
Dec. 31, 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $178,933 | $408,596 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation | 128,919 | 127,173 |
Amortization | 61,018 | 48,712 |
Stock-based compensation | 37,060 | 28,451 |
Deferred income taxes | (39,165) | 7,070 |
Foreign currency transaction (gain) | (1,136) | (8) |
Loss on sale of plant and equipment | 5,582 | 2,947 |
Changes in assets and liabilities, net of effect of acquisitions: | ||
Accounts receivable, net | 73,842 | 329,637 |
Inventories | 44,867 | (54,855) |
Prepaid expenses | 44,928 | 9,550 |
Other assets | 19,454 | 47,127 |
Accounts payable, trade | 36,522 | (202,631) |
Accrued payrolls and other compensation | (98,140) | (124,407) |
Accrued domestic and foreign taxes | 32,263 | (45,560) |
Other accrued liabilities | 26,776 | (86,505) |
Pensions and other postretirement benefits | 50,619 | 16,609 |
Other liabilities | 3,908 | (67,391) |
Net cash provided by operating activities | 606,250 | 444,515 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisitions (less cash acquired of $24,191 in 2008) | 0 | (705,128) |
Capital expenditures | (61,232) | (174,391) |
Proceeds from sale of plant and equipment | 5,665 | 10,550 |
Other | (14,310) | (2,973) |
Net cash (used in) investing activities | (69,877) | (871,942) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 4,538 | 969 |
(Payments for) common shares | (10,000) | (433,960) |
Tax benefit from share-based compensation | 1,489 | 2,911 |
(Payments for) proceeds from notes payable, net | (378,174) | 924,457 |
Proceeds from long-term borrowings | 1,937 | 13,057 |
(Payments for) long-term borrowings | (23,696) | (26,086) |
Dividends | (80,363) | (81,331) |
Net cash (used in) provided by financing activities | (484,269) | 400,017 |
Effect of exchange rate changes on cash | (5,816) | (36,648) |
Net increase (decrease) in cash and cash equivalents | 46,288 | (64,058) |
Cash and cash equivalents at beginning of year | 187,611 | 326,048 |
Cash and cash equivalents at end of period | $233,899 | $261,990 |
2_Statement Of Cash Flows Indir
Statement Of Cash Flows Indirect (Parenthetical) (USD $) | ||
In Thousands | 6 Months Ended
Dec. 31, 2009 | 6 Months Ended
Dec. 31, 2008 |
Acquisitions, cash acquired | $0 | $24,191 |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION (Dollars in thousands) (Unaudited) The Company operates in three reportable business segments: Industrial, Aerospace and Climate Industrial Controls. The Industrial Segment is the largest and includes a significant portion of international operations. Industrial - This segment produces a broad range of motion-control and fluid systems and components used in all kinds of manufacturing, packaging, processing, transportation, mobile construction, agricultural and military machinery and equipment. Sales are made directly to major original equipment manufacturers (OEMs) and through a broad distribution network to smaller OEMs and the aftermarket. Aerospace - This segment designs and manufactures products and provides aftermarket support for commercial, business jet, military and general aviation aircraft, missile and spacecraft markets. The Aerospace Segment provides a full range of systems and components for hydraulic, pneumatic and fuel applications. Climate Industrial Controls - This segment manufactures motion-control systems and components for use primarily in the refrigeration and air conditioning and transportation industries. Three Months Ended December31, Six Months Ended December31, 2009 2008 2009 2008 Net sales Industrial: North America $ 847,208 $ 993,040 $ 1,630,293 $ 2,100,117 International 932,057 1,042,741 1,782,307 2,265,933 Aerospace 400,551 473,667 817,407 952,140 Climate Industrial Controls 174,892 179,208 361,866 435,154 Total $ 2,354,708 $ 2,688,656 $ 4,591,873 $ 5,753,344 Segment operating income Industrial: North America $ 114,435 $ 107,615 $ 190,606 $ 268,101 International 82,636 115,122 144,459 318,074 Aerospace 41,026 69,658 94,172 137,806 Climate Industrial Controls 6,144 (12,814 ) 16,641 2,685 Total segment operating income 244,241 279,581 445,878 726,666 Corporate general and administrative expenses 31,472 42,372 57,774 82,746 Income from operations before interest expense and other 212,769 237,209 388,104 643,920 Interest expense 25,029 30,307 50,752 58,403 Other expense 45,505 7,669 81,088 27,896 Income before income taxes $ 142,235 $ 199,233 $ 256,264 $ 557,621 |
Management representation
Management representation | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Management representation | 1. Management representation In the opinion of the management of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of December31, 2009, the results of operations for the three and six months ended December31, 2009 and 2008 and cash flows for the six months then ended. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Companys 2009 Annual Report on Form 10-K. Interim period results are not necessarily indicative of the results to be expected for the full fiscal year. Certain prior period amounts have been reclassified to conform to the current year presentation. These include the adoption of new accounting rules regarding noncontrolling interests. The Company has evaluated for disclosure subsequent events that have occurred up to February4, 2010, the date of the filing of the Companys Form 10-Q for the quarter ended December31, 2009. |
New accounting pronouncements
New accounting pronouncements | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
New accounting pronouncements | 2. New accounting pronouncements Effective July1, 2009, the Company adopted the Financial Accounting Standards Boards (FASB) new guidance regarding business combinations. This guidance changed the accounting for business combinations both during the period of acquisition and in subsequent periods. Acquisition costs will generally be expensed as incurred; noncontrolling interests will be valued at fair value at the acquisition date; in-process research and development will be recorded at fair value as an indefinite-lived asset at the acquisition date; restructuring costs associated with a business combination will generally be expensed subsequent to the acquisition date; and changes in deferred tax asset valuation allowances and income tax uncertainties after the acquisition date generally will affect income tax expense. The adoption of this guidance did not have a material effect on the Companys financial position or results of operations during the six months ended December31, 2009. In December 2008, the FASB issued new guidance requiring detailed disclosures regarding the investment strategies, fair value measurements and concentrations of risk of plan assets of a defined benefit pension or other postretirement plan. This guidance is effective for fiscal years ending after December31, 2009, and the Company has not yet determined the impact it will have on the Companys retirement benefits disclosures. |
Product warranty
Product warranty | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Product warranty | 3. Product warranty In the ordinary course of business, the Company warrants its products against defect in design, materials and workmanship over various time periods. The warranty accrual as of December31, 2009 and June30, 2009 is immaterial to the financial position of the Company and the change in the accrual for the current quarter and first six months of fiscal 2010 is immaterial to the Companys results of operations and cash flows. |
Earnings per share
Earnings per share | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Earnings per share | 4. Earnings per share The following table presents a reconciliation of the numerator and denominator of basic and diluted earnings per share for the three and six months ended December31, 2009 and 2008. Three Months Ended December31, Six Months Ended December31, 2009 2008 2009 2008 Numerator: Net income attributable to common shareholders $ 104,546 $ 155,401 $ 178,039 $ 405,577 Denominator: Basic - weighted average common shares 160,767,790 160,839,120 160,698,541 162,627,269 Increase in weighted average from dilutive effect of equity-based awards 1,976,998 916,466 1,679,541 1,644,797 Diluted - weighted average common shares, assuming exercise of equity-based awards 162,744,788 161,755,586 162,378,082 164,272,066 Basic earnings per share $ .65 $ .97 $ 1.11 $ 2.49 Diluted earnings per share $ .64 $ .96 $ 1.10 $ 2.47 For the three months ended December31, 2009 and 2008, 7,905,697 and 9,904,439 common shares subject to equity-based awards, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. For the six months ended December31, 2009 and 2008, 9,729,440 and 4,694,129 common shares subject to equity-based awards, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. |
Share repurchase program
Share repurchase program | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Share repurchase program | 5. Share repurchase program The Company has a program to repurchase its common shares. Under the program, the Company is authorized to repurchase an amount of common shares each fiscal year equal to the greater of 7.5million shares or five percent of the shares outstanding as of the end of the prior fiscal year. Repurchases are funded primarily from operating cash flows and commercial paper borrowings, and the shares are initially held as treasury stock. During the three-month period ended December31, 2009, the Company repurchased 91,902 shares of its common stock at an average price of $54.41 per share. Fiscal year-to-date, the Company repurchased 197,832 shares at an average price of $50.55 per share. |
Business realignment charges
Business realignment charges | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Business realignment charges | 6. Business realignment charges During the second quarter and first six months of fiscal 2010, the Company recorded charges of $7.1 million and $26.4 million, respectively, for the costs to structure its businesses in light of current and anticipated customer demand. The charges primarily consist of severance costs related to plant closures as well as general work force reductions implemented by various operating units throughout the world. The Company believes the realignment actions will positively impact future results of operations but will have no material effect on liquidity and sources and uses of capital. The Industrial Segment recognized $5.6 million and $22.7 million of the total charge for the second quarter and first six months of fiscal 2010, respectively, relating to approximately 195 and 1,015 employees, respectively. The Climate Industrial Controls Segment recognized $0.9 million and $3.1 million of the total charge for the second quarter and first six months of fiscal 2010, respectively, relating to approximately 237 employees for the first six months of fiscal 2010. The Aerospace Segment recognized $0.6 million of the total charge for the second quarter and first six months of fiscal 2010 relating to approximately 50 employees. The charge is presented primarily in the Cost of sales caption in the Consolidated Statement of Income for the three and six months ended December31, 2009. As of December31, 2009, approximately $13.7 million in severance payments have been made with the remaining payments expected to be made by June30, 2010. During the second quarter and first six months of fiscal 2009, the Company recorded charges of $9.6 million and $11.7 million, respectively, for the costs to structure its businesses in light of current and anticipated customer demand. The charges primarily consisted of severance costs related to plant closures as well as general work force reductions implemented by various operating units throughout the world. The Company believes the realignment actions will positively impact future results of operations but will have no material effect on liquidity and sources and uses of capital. The Industrial Segment recognized $4.2 million and $5.7 million of the total charge for the second quarter and first six months of fiscal 2009, respectively, relating to approximately 1,000 and 1,075 employees, respectively. The Climate Industrial Controls Segment recognized $5.4 million and $6.0 million of the total charge for the second quarter and first six months of fiscal 2009, respectively, relating to approximately 175 and 245 employees, respectively. The charge is presented primarily in the Cost of sales caption in the Consolidated Statement of Income for the three and six months ended December31, 2008. All severance payments have been made. Additional charges to be recognized in future periods related to the specific actions discussed above are not expected to be material. |
Equity
Equity | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Equity | 7. Equity Effective July1, 2009, the Company adopted the FASBs new guidance regarding the accounting for noncontrolling interests. The new rules require the recognition of a noncontrolling interest as equity in the consolidated financial statements and separate from the parents equity. The amount of net income attributable to the noncontrolling interest is included in Net income on the face of the Consolidated Statement of Income. Changes in equity for the three months ended December31, 2008 and December31, 2009 are as follows: Shareholders Equity Noncontrolling Interests Total Equity Balance September30, 2008 $ 4,736,618 $ 79,255 $ 4,815,873 Net income 155,401 1,360 156,761 Other comprehensive (loss) income: Foreign currency translation (279,655 ) 10,322 (269,333 ) Retirement benefits plan activity 5,036 5,036 Net unrealized (loss) (1,877 ) (1,877 ) Total comprehensive (loss) income (121,095 ) 11,682 (109,413 ) Dividends paid (40,222 ) (4,685 ) (44,907 ) Stock incentive plan activity 8,809 8,809 Shares purchased at cost (20,001 ) (20,001 ) Acquisition activity 3,776 3,776 Balance December31, 2008 $ 4,564,109 $ 90,028 $ 4,654,137 Balance September30, 2009 $ 4,481,984 $ 87,629 $ 4,569,613 Net income 104,546 417 104,963 Other comprehensive (loss) income: Foreign currency translation (22,935 ) (2,281 ) (25,216 ) Retirement benefits plan activity 13,169 13,169 Net unrealized gain 442 442 Total comprehensive (loss) income 95,222 (1,864 ) 93,358 Dividends paid (40,192 ) (6 ) (40,198 ) Stock incentive plan activity 13,552 13,552 Shares purchased at cost (5,000 ) (5,000 ) Retirement benefits plan activity 6,461 6,461 Balance December31, 2009 $ 4,552,027 $ 85,759 $ 4,637,786 Changes in equity for the six months ended December31, 2008 and December31, 2009 are as follows: Shareholders Equity Noncontrolling Interests Total Equity Balance July1, 2008 $ 5,251,553 $ 78,589 $ 5,330,142 Net income 405,577 3,019 408,596 Other comprehensive (loss) income: Foreign currency translation (640,150 ) 10,154 (629,996 ) Retirement benefits plan activity 13,036 13,036 Net unrealized (loss) (3,277 ) (3,277 ) Total comprehensive (loss) income (224,814 ) 13,173 (211,641 ) Dividends paid (81,331 ) (4,685 ) (86,016 ) Stock incentive plan activity 39,802 39,802 Shares purchased at cost (43 |
Goodwill and intangible assets
Goodwill and intangible assets | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Goodwill and intangible assets | 8. Goodwill and intangible assets The changes in the carrying amount of goodwill for the six months ended December31, 2009 are as follows: Industrial Segment Aerospace Segment Climate Industrial Controls Segment Total Balance June30, 2009 $ 2,496,449 $ 98,709 $ 307,919 $ 2,903,077 Foreign currency translation 42,229 8 1,734 43,971 Goodwill adjustments 1,256 1,256 Balance December31, 2009 $ 2,539,934 $ 98,717 $ 309,653 $ 2,948,304 Goodwill adjustments primarily represent final adjustments to the purchase price allocation during the twelve-month period subsequent to the acquisition date and primarily involved the valuation of income tax liabilities. Intangible assets are amortized on the straight-line method over their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible assets: December31, 2009 June30, 2009 GrossCarrying Amount Accumulated Amortization GrossCarrying Amount Accumulated Amortization Patents $ 121,406 $ 47,213 $ 119,811 $ 42,188 Trademarks 292,051 76,597 287,691 62,926 Customer lists and other 1,188,358 223,023 1,154,713 183,239 Total $ 1,601,815 $ 346,833 $ 1,562,215 $ 288,353 Total intangible amortization expense for the six months ended December31, 2009 was $61,018. The estimated amortization expense for the five years ending June30, 2010 through 2014 is $112,719, $107,931, $95,160, $86,729 and $85,124, respectively. |
Retirement benefits
Retirement benefits | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Retirement benefits | 9. Retirement benefits Net periodic pension cost recognized included the following components: Three Months Ended December31, Six Months Ended December31, 2009 2008 2009 2008 Service cost $ 17,316 $ 15,805 $ 36,383 $ 33,455 Interest cost 44,880 45,155 88,087 86,952 Expected return on plan assets (44,152 ) (47,222 ) (87,484 ) (93,773 ) Amortization of prior service cost 3,351 2,230 6,506 5,635 Amortization of net actuarial loss 17,094 5,888 32,601 15,525 Amortization of initial net (asset) obligation (14 ) 52 (8 ) (30 ) Net periodic benefit cost $ 38,475 $ 21,908 $ 76,085 $ 47,764 Postretirement benefit cost recognized included the following components: ThreeMonthsEnded December31, Six Months Ended December31, 2009 2008 2009 2008 Service cost $ 127 $ 380 $ 278 $ 759 Interest cost 1,037 1,425 1,963 2,850 Net amortization and deferral and other (114 ) (185 ) (229 ) (371 ) Net periodic benefit cost $ 1,050 $ 1,620 $ 2,012 $ 3,238 During the first six months of fiscal 2010, the Company made $22 million in cash contributions to its qualified defined benefit plans and expects to contribute approximately $118 million in cash to its qualified defined benefit plans during the last six months of fiscal 2010. The majority of the remaining cash contribution expected to be made in fiscal 2010 is discretionary. |
Income taxes
Income taxes | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Income taxes | 10. Income taxes As of December31, 2009, the Company had gross unrecognized tax benefits of $141,596. The total amount of unrecognized benefits that, if recognized, would affect the effective tax rate was $122,405. The accrued interest related to the gross unrecognized tax benefits, excluded from the amounts above, was $11,007. The Company and its subsidiaries file income tax returns in the United States and various state and foreign jurisdictions. In the normal course of business, the Companys tax returns are subject to examination by taxing authorities throughout the world. The Company is no longer subject to examinations of its U.S. federal income tax returns by the Internal Revenue Service (IRS) for fiscal years through 2005. All significant state, local and foreign tax returns have been examined for fiscal years through 2001. The Company believes that it is reasonably possible that within the next 12 months the IRS examination for fiscal years 2006 and 2007 will be settled. The Company anticipates that within the next 12 months the total amount of unrecognized tax benefits related to income inclusion items, loss deductions and loss carryforwards may be reduced by an amount of up to $65 million due to the settlement of examinations and the expiration of statutes of limitation. |
Fair value measurement
Fair value measurement | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Fair value measurement | 11. Fair value measurement On July1, 2009, the Company adopted the FASBs new guidance relating to fair value measurements of nonfinancial assets and nonfinancial liabilities. The adoption of this provision did not have a material effect on the Companys financial position or results of operations. The Companys financial instruments consist primarily of investments in cash, cash equivalents and long-term investments as well as obligations under notes payable and long-term debt. Due to their short-term nature, the carrying values of Cash and cash equivalents, Investments and Notes payable approximate fair value. The carrying value of Long-term debt (excluding leases) was $1,881,971 and $1,889,844 at December31, 2009 and June30, 2009, respectively, and was estimated to have a fair value of $1,984,434 and $1,899,246 at December31, 2009 and June30, 2009, respectively. The fair value of Long-term debt was estimated using discounted cash flow analyses assuming current interest rates for similar types of borrowing arrangements and maturities. The fair value of financial assets and financial liabilities that were measured at fair value on a recurring basis at December31, 2009 follows: Total QuotedPrices In Active Markets (Level 1) SignificantOther Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Available for sale equity securities $ 3,959 $ 3,959 $ $ Derivatives 229 229 Liabilities: Deferred compensation Plans 112,951 112,951 Derivatives 2,945 2,945 Available for sale equity securities consists of an investment in an electronic and electrical equipment company, the fair of which is measured using quoted market prices. Derivatives primarily consist of costless collar contracts, the fair value of which is calculated through a model that utilizes market observable inputs including both spot and forward prices for the same underlying currencies. The Company has established nonqualified deferred compensation programs which permit officers, directors and certain management employees to defer a portion of their compensation, on a pre-tax basis, until their termination of employment. Changes in the value of the compensation deferred under these programs are recognized based on quoted market prices for the participants investment elections. |
Contingencies
Contingencies | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Contingencies | 12. Contingencies The Company is involved in various litigation matters arising in the normal course of business, including proceedings based on product liability claims, workers compensation claims and alleged violations of various environmental laws. The Company is self-insured in the United States for health care, workers compensation, general liability and product liability up to predetermined amounts, above which, subject to certain limitations, third-party insurance applies. Management regularly reviews the probable outcome of these proceedings, the expenses expected to be incurred, the availability and limits of the insurance coverage, and the established accruals for liabilities. While the outcome of pending proceedings cannot be predicted with certainty, management believes that any liabilities that may result from these proceedings will not have a material adverse effect on the Companys liquidity, financial condition or results of operations. Parker ITR S.r.l. (Parker ITR), a subsidiary acquired on January31, 2002, has been the subject of a number of lawsuits and regulatory investigations, which are more fully described in Part II, Item1 of this Quarterly Report on Form 10-Q. Each of these lawsuits and regulatory investigations was also described in the Companys Annual Report on Form 10-K for the fiscal year ended June30, 2009. With respect to the class action lawsuits, the Company recognized $20,000 in expense in fiscal 2008 and $2,322 in expense in fiscal 2009, $1,167 of which was recognized in the first six months of fiscal 2009. No expenses related to the class action lawsuits were recognized during the first six months of fiscal 2010. With respect to the regulatory investigations, the Company recognized $35,084 in expense in fiscal 2009, none of which was recognized during the first six months of fiscal 2009, and recognized $189 in expense during the first six months of fiscal 2010. The Company has made all required payments relating to the class action lawsuits and regulatory investigations. With respect to the class action lawsuits, the Company made payments of $22,322 in fiscal 2009, none of which were made during the first six months of fiscal 2009, and made no payments in the first six months of fiscal 2010. With respect to the regulatory investigations, the Company made payments of $32,794 in fiscal 2009, none of which were made during the first six months of fiscal 2009, and made payments of $35 in the first six months of fiscal 2010. As of December31, 2009, the Company had a remaining reserve of $2,444 related to the class action lawsuits and regulatory investigations. Legal expenses related to these matters are being expensed as incurred and totaled $797 and $659 for the second quarter of fiscal 2010 and 2009, respectively, and $1,081 and $1,804 during the first six months of fiscal 2010 and 2009, respectively. |
Document Information
Document Information | |
6 Months Ended
Dec. 31, 2009 USD / shares | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-12-31 |
Entity Information
Entity Information (USD $) | |
6 Months Ended
Dec. 31, 2009 | |
Trading Symbol | PH |
Entity Registrant Name | PARKER HANNIFIN CORP |
Entity Central Index Key | 0000076334 |
Current Fiscal Year End Date | --06-30 |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 160,799,431 |