Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Oct. 31, 2017 | Nov. 30, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | DONALDSON CO INC | |
Entity Central Index Key | 29,644 | |
Current Fiscal Year End Date | --07-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Oct. 31, 2017 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 129,907,559 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Earnings - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Income Statement [Abstract] | ||
Net sales | $ 644.8 | $ 553 |
Cost of sales | 420.5 | 358.8 |
Gross profit | 224.3 | 194.2 |
Operating expenses | 133.6 | 117.8 |
Operating income | 90.7 | 76.4 |
Other expense (income), net | 0.8 | (8.1) |
Interest expense | 5.2 | 4.8 |
Earnings before income taxes | 84.7 | 79.7 |
Income taxes | 23.8 | 21.7 |
Net earnings | $ 60.9 | $ 58 |
Weighted average shares - basic (in shares) | 130.8 | 133.4 |
Weighted average shares - diluted (in shares) | 132.7 | 134.6 |
Net earnings per share - basic (in usd per share) | $ 0.47 | $ 0.43 |
Net earnings per share - diluted (in usd per share) | 0.46 | 0.43 |
Cash dividends paid per share (in usd per share) | $ 0.180 | $ 0.175 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 60.9 | $ 58 |
Other comprehensive income (loss): | ||
Foreign currency translation loss | (5.1) | (12.4) |
Pension liability adjustment, net of deferred taxes of $(0.5) and $(1.0), respectively | 0.8 | 2.4 |
Gain on hedging derivatives, net of deferred taxes of $(1.9) and $(0.5), respectively | 2.3 | 1 |
Comprehensive income | $ 58.9 | $ 49 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Gain (loss) on hedging derivatives, deferred taxes | $ (1.9) | $ (0.5) |
Pension and postretirement liability adjustment, deferred taxes | $ (0.5) | $ (1) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 349.6 | $ 308.4 |
Accounts receivable, less allowance of $8.7 and $8.7, respectively | 483 | 497.7 |
Inventories, net | 319.6 | 293.5 |
Prepaid expenses and other current assets | 52.1 | 51.4 |
Total current assets | 1,204.3 | 1,151 |
Property, plant and equipment, net | 483.8 | 484.6 |
Goodwill | 238.2 | 238.1 |
Intangible assets, net | 39.2 | 40.6 |
Deferred income taxes | 30.6 | 30.3 |
Other long-term assets | 36.3 | 35.1 |
Total assets | 2,032.4 | 1,979.7 |
Current liabilities: | ||
Short-term borrowings | 13.8 | 23.3 |
Current maturities of long-term debt | 25.4 | 50.6 |
Trade accounts payable | 190.6 | 194 |
Other current liabilities | 185.3 | 216.2 |
Total current liabilities | 415.1 | 484.1 |
Long-term debt | 631.7 | 537.3 |
Deferred income taxes | 4.3 | 3.6 |
Other long-term liabilities | 100.3 | 100.2 |
Total liabilities | 1,151.4 | 1,125.2 |
Commitments and contingencies (Note 14) | ||
Shareholders' Equity: | ||
Preferred stock, $1.00 par value, 1,000,000 shares authorized, none issued | 0 | 0 |
Common stock, $5.00 par value, 240,000,000 shares authorized, 151,643,194 shares issued | 758.2 | 758.2 |
Additional paid-in capital | 0.8 | 0 |
Retained earnings | 1,102.2 | 1,041.2 |
Non-controlling interests | 4.7 | 4.4 |
Stock compensation plans | 18 | 15.7 |
Accumulated other comprehensive loss | (159) | (157) |
Treasury stock, 21,793,696 and 21,037,353 shares, respectively, at cost | (843.9) | (808) |
Total shareholders' equity | 881 | 854.5 |
Total liabilities and shareholders' equity | $ 2,032.4 | $ 1,979.7 |
Condensed Consolidated Balance6
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 8.7 | $ 8.7 |
Preferred stock, par value (in usd per share) | $ 1 | $ 1 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in usd per share) | $ 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 | 21,793,696 | 21,037,353 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Operating Activities | ||
Net earnings | $ 60.9 | $ 58 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 18.9 | 18.9 |
Deferred income taxes | 0.2 | (0.8) |
Stock compensation plan expense | 6.7 | 1.5 |
Other, net | 0.8 | (7.6) |
Changes in operating assets and liabilities, excluding effect of acquired businesses | (23.6) | 31.5 |
Net cash provided by operating activities | 63.9 | 101.5 |
Investing Activities | ||
Net expenditures on property, plant and equipment | (19.9) | (12.4) |
Acquisitions, net of cash acquired | 0.8 | (10.9) |
Net cash used in investing activities | (19.1) | (23.3) |
Financing Activities | ||
Proceeds from long-term debt | 105 | 0 |
Repayments of long-term debt | (35.2) | (0.3) |
Change in short-term borrowings | (9.1) | 4.4 |
Purchase of treasury stock | (42.6) | (41.4) |
Dividends paid | (23.4) | (23.2) |
Tax withholding for stock compensation transactions | (0.5) | (0.8) |
Exercise of stock options | 3.9 | 4.3 |
Net cash used in financing activities | (1.9) | (57) |
Effect of exchange rate changes on cash | (1.7) | (2.2) |
Increase in cash and cash equivalents | 41.2 | 19 |
Cash and cash equivalents, beginning of year | 308.4 | 243.2 |
Cash and cash equivalents, end of period | $ 349.6 | $ 262.2 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Oct. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies 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 (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 statement of earnings, comprehensive income, financial position and cash flows have been included and are of a normal recurring nature. Operating results for the three month period ended October 31, 2017 are not necessarily indicative of the results that may be expected for future periods. The year-end condensed balance sheet information was derived from the Company's audited financial statements but does not include all disclosures required by GAAP. For further information, refer to the Audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2017 . New Accounting Standards Recently Adopted In July 2015, the FASB issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11), which amended the guidance requiring companies not using the last-in, first-out (LIFO) method to measure inventory at the lower of cost and net realizable value rather than the lower of cost or market. This accounting guidance was effective for the Company beginning in the first quarter of fiscal 2018 and did not have an impact on its Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). This update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 was effective for the Company beginning in the first quarter of fiscal 2018 and the guidance affecting the effective tax rate was adopted prospectively. The Condensed Consolidated Statements of Cash Flows is also presented retrospectively with the guidance of this new standard and, for the three months ended October 31, 2016 , resulted in an increase of $1.8 million to net cash provided by operating activities and a corresponding $1.8 million increase to net cash used in financing activities. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) (ASU 2016-15). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for the Company beginning in the first quarter of fiscal 2019. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted ASU 2016-15 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This update removes the current exception in GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. ASU 2016-16 is effective for the Company beginning in the first quarter of fiscal 2019 , and early adoption is permitted. The Company adopted ASU 2016-16 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) (ASU 2017-09). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for the Company beginning in the first quarter of fiscal 2019, and early adoption is permitted. The Company adopted ASU 2017-09 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements. New Accounting Standards Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract. In 2016, the FASB issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12 and ASU 2016-20 to clarify, among other things, the implementation guidance related to principal versus agent considerations, identifying performance obligations and accounting for licenses of intellectual property. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2019 , and early adoption is permitted. The amendments in this update are to be applied on a retrospective basis, either to each prior reporting period presented or by presenting the cumulative effect of applying the update recognized at the date of initial application. The Company is evaluating the impact of the adoption of the standard on its Consolidated Financial Statements. A project team has been established and is conducting surveys of the businesses and performing revenue contract analyses to gather information and identify where potential differences could result in applying the requirements of the new standard. Based on the results of the surveys and contract analyses, the Company will assess the financial impact of the new standard on its Consolidated Financial Statements and determine the method of adoption. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), which amends the guidance requiring companies to recognize assets and liabilities for leases with lease terms of more than twelve months. The new guidance will require companies to record both capital and operating leases on the balance sheet. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2020 on a modified retrospective basis, and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on its Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business (ASU 2017-01). The new guidance provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments provide more consistency in applying the guidance, reduce the costs of application and make the definition of a business more operable. ASU 2017-01 is effective for the Company beginning in the first quarter of fiscal 2019 . The Company does not expect the application of ASU 2017-01 will have a material impact on its Consolidated Financial Statements. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715) (ASU 2017-07). The new guidance requires employers to disaggregate and present separately the current service cost component from the other components of net benefit cost within the consolidated statement of earnings. ASU 2017-07 is effective for the Company beginning in the first quarter of fiscal 2019 , and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2017-07 on its Consolidated Statements of Earnings. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), which improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. The guidance expands the ability to hedge non-financial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. ASU 2017-12 is effective for the Company beginning in the first quarter of fiscal 2020 , and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2017-12 on its Consolidated Financial Statements. |
Acquisitions
Acquisitions | 3 Months Ended |
Oct. 31, 2017 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions On May 1, 2017, the Company acquired 100% of the shares of Hy-Pro Corporation (Hy-Pro). Hy-Pro designs and manufactures filtration systems and replacement filters for stationary hydraulic and industrial lubrication applications. Hy-Pro has manufacturing locations in Anderson, Indiana and Vancouver, Washington. Total consideration for the transaction was $21.9 million after recording a working capital adjustment in accordance with the purchase agreement. The Company received cash of $0.8 million for this adjustment during the first quarter, which reduced the purchase price and goodwill by a corresponding amount. On August 31, 2016, the Company acquired the net assets of Industrias Partmo S.A. (Partmo) in Colombia. Partmo is a leading manufacturer of replacement air, lube and fuel filters in Colombia for medium and heavy duty engines. Total consideration for the transaction was $12.1 million . For the two acquisitions that occurred during the year ended July 31, 2017, the Company acquired $18.1 million of net tangible assets, $8.6 million of intangible assets that had estimated useful lives ranging from seven to twenty years at the time of acquisition and $7.3 million of goodwill. Pro forma financial information for these acquisitions have not been presented because they are not material to the Company's consolidated results of operations. |
Supplemental Balance Sheet Info
Supplemental Balance Sheet Information | 3 Months Ended |
Oct. 31, 2017 | |
Assets [Abstract] | |
Supplemental Balance Sheet Information | Supplemental Balance Sheet Information The components of inventory are as follows (in millions): October 31, July 31, Raw materials $ 105.6 $ 96.3 Work in process 20.8 19.7 Finished products 193.2 177.5 Inventories, net $ 319.6 $ 293.5 The components of property, plant and equipment are as follows (in millions): October 31, July 31, Land $ 20.5 $ 20.6 Buildings 293.6 292.5 Machinery and equipment 871.3 866.8 Construction in progress 56.8 48.9 Less: accumulated depreciation (758.4 ) (744.2 ) Property, plant and equipment, net $ 483.8 $ 484.6 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Oct. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 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 are excluded from the diluted net earnings per share calculations because their exercise prices are greater than the average market price of the Company’s common stock during those periods. Options excluded from the diluted net earnings per share calculation were zero and 1.5 million for the three months ended October 31, 2017 and 2016 , respectively. The following table presents the information necessary to calculate basic and diluted net earnings per share (in millions, except per share amounts): Three Months Ended 2017 2016 Net earnings for basic and diluted earnings per share computation $ 60.9 $ 58.0 Weighted average common shares outstanding: Weighted average common shares – basic 130.8 133.4 Dilutive impact of share based awards 1.9 1.2 Weighted average common shares – diluted 132.7 134.6 Net earnings per share – basic $ 0.47 $ 0.43 Net earnings per share – diluted $ 0.46 $ 0.43 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Oct. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill is assessed for impairment annually or more frequently if an event occurs or circumstances change that would indicate impairment. The Company performed its annual impairment assessment during the third quarter of fiscal 2017. The results of this assessment were that the estimated fair values of the reporting units to which goodwill is assigned continued to exceed the corresponding carrying values of the reporting units, resulting in no goodwill impairment. The following is a reconciliation of goodwill for the three months ended October 31, 2017 (in millions): Engine Products Industrial Products Total Goodwill Balance as of July 31, 2017 $ 84.3 $ 153.8 $ 238.1 Goodwill acquired 0.6 — 0.6 Foreign exchange translation (0.1 ) (0.4 ) (0.5 ) Balance as of October 31, 2017 $ 84.8 $ 153.4 $ 238.2 The following is a reconciliation of intangible assets for the three months ended October 31, 2017 (in millions): Gross Carrying Amount Accumulated Amortization Net Intangible Assets Balance as of July 31, 2017 $ 106.6 $ (66.0 ) $ 40.6 Amortization expense — (1.4 ) (1.4 ) Foreign exchange translation (0.2 ) 0.2 — Balance as of October 31, 2017 $ 106.4 $ (67.2 ) $ 39.2 |
Warranty
Warranty | 3 Months Ended |
Oct. 31, 2017 | |
Standard Product Warranty Disclosure [Abstract] | |
Warranty | Warranty The Company estimates warranty expense on certain products at the time of sale. The following is a reconciliation of warranty reserves, included in other current liabilities and other long-term liabilities, for the three months ended October 31, 2017 and 2016 (in millions): Three Months Ended 2017 2016 Balance at beginning of period $ 14.6 $ 11.9 Accruals for warranties issued during the reporting period 0.7 0.7 Accruals related to pre-existing warranties (including changes in estimates) 0.9 3.8 Less: settlements made during the period (0.5 ) (1.0 ) Balance at end of period $ 15.7 $ 15.4 There were no material specific warranty matters accrued for or significant settlements made in the three months ended October 31, 2017 or 2016 . The Company’s warranty matters are not expected to have a material impact on the Company's results of operations, liquidity or financial position. |
Stock Based Compensation
Stock Based Compensation | 3 Months Ended |
Oct. 31, 2017 | |
Share-based Compensation [Abstract] | |
Stock Based Compensation | Stock Based Compensation Stock-based employee compensation expense is recognized using the fair-value method for all awards. The Company determines the fair value of these awards using the Black-Scholes option pricing model. Options are granted whereby the option exercise price is equivalent to the market price of the Company's common stock at the date of grant. There were 809,550 stock options awarded during the three months ended October 31, 2017 . The weighted average fair value for options granted during the three months ended October 31, 2017 was $9.18 . There were no stock options awarded during the three months ended October 31, 2016 because the Company moved its annual stock option grant to the first quarter in the current fiscal year from its historical practice of providing such grants during the second quarter in the fiscal year. For the three months ended October 31, 2017 , the Company recorded pretax stock-based compensation expense associated with stock options of $3.8 million and recorded $1.2 million of related tax benefits. For the three months ended October 31, 2016 , the Company recorded pretax stock-based compensation expense associated with stock options of $1.1 million and recorded $0.3 million of related tax benefits. The following table summarizes stock option activity during the three months ended October 31, 2017 : Options Outstanding Weighted Average Exercise Price Outstanding as of July 31, 2017 6,685,551 $ 32.60 Granted 809,550 $ 45.43 Exercised (181,826 ) $ 23.37 Canceled (8,330 ) $ 35.62 Outstanding as of October 31, 2017 7,304,945 $ 34.25 The total intrinsic value of options exercised during the three months ended October 31, 2017 and 2016 was $4.2 million and $3.4 million , respectively. The following table summarizes information concerning outstanding and exercisable options as of October 31, 2017 : Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price of Outstanding Options Number Exercisable Weighted Average Exercise Price of Exercisable Options $ 0.00 to $22.69 1,129,408 1.71 $ 19.67 1,129,408 $ 19.67 $22.70 to $28.69 906,002 7.87 $ 27.90 315,426 $ 27.58 $28.70 to $34.69 1,444,975 4.15 $ 31.61 1,427,244 $ 31.61 $34.70 to $40.69 1,437,465 5.89 $ 37.03 1,153,628 $ 36.66 $40.70 and above 2,387,095 8.49 $ 43.47 697,995 $ 42.25 7,304,945 6.00 $ 34.25 4,723,701 $ 31.29 As of October 31, 2017 , the aggregate intrinsic value of options outstanding and exercisable was $94.7 million and $75.2 million , respectively. As of October 31, 2017 , there was $10.9 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 fiscal years 2018 , 2019 , 2020 and 2021 . |
Employee Benefit Plans
Employee Benefit Plans | 3 Months Ended |
Oct. 31, 2017 | |
Retirement Benefits, Description [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company and certain of its international subsidiaries have defined benefit pension plans. There are two types of U.S. plans. The first type of U.S. plan (Hourly Pension Plan) is a traditional defined benefit pension plan primarily for union employees. The second plan (Salaried Pension Plan) is for some salaried and non-union production employees 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 Company no longer allows entrants into the U.S. Salaried Pension Plan and the employees in this plan no longer continue to accrue Company contribution credits under the plan. Employees are instead eligible for a 3% annual Company retirement contribution to their 401(k) in addition to the Company’s normal 401(k) match. The non-U.S. plans generally provide pension benefits based on years of service and compensation level. Net periodic benefit costs for the Company’s pension plans include the following components (in millions): Three Months Ended 2017 2016 Net periodic benefit costs: Service cost $ 2.0 $ 2.1 Interest cost 3.7 3.4 Expected return on assets (6.5 ) (6.6 ) Prior service cost amortization 0.1 0.1 Actuarial loss amortization 1.2 1.8 Net periodic benefit costs $ 0.5 $ 0.8 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 three months ended October 31, 2017 , the Company made contributions of $1.2 million to its U.S. pension plans and $0.3 million to its non-U.S. pension plans. The estimated minimum funding requirement for the Company’s U.S. plans for the year ending July 31, 2018 is $3.7 million . In accordance with the Pension Protection Act of 2006, this contribution obligation may 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 for fiscal 2018 . The Company estimates that it will contribute an additional $1.0 million to its non-U.S. pension plans during the remainder of fiscal 2018 based upon the local government prescribed funding requirements. |
Income Taxes
Income Taxes | 3 Months Ended |
Oct. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes 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 (IRS) has completed examinations of the Company’s U.S. federal income tax returns through 2013. Currently, the Company is under examination by the IRS for fiscal years 2015 and 2016. As of October 31, 2017 , the gross unrecognized tax benefits were $19.6 million and accrued interest and penalties on these unrecognized tax benefits were $2.5 million . The Company recognizes accrued interest and penalties 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 approximately five years, up to $2.6 million of the unrecognized tax benefits could potentially expire in the next 12 -month period, unless extended by an audit. It is reasonably possible that matters associated with either current or future audits and disputes could cause adjustments to previously recorded reserves in the next 12-month period. Quantification of an estimated range and timing of future audit adjustments cannot be made at this time. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Oct. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | Fair Value Measurements As of October 31, 2017 , the carrying values of cash and cash equivalents, accounts receivables, short-term borrowings and trade accounts payable approximate fair value because of the short-term nature of these instruments. As of October 31, 2017 , the estimated fair value of long-term debt with fixed interest rates was $303.4 million compared to its carrying value of $300.0 million . The fair value is estimated by discounting the projected cash flows using the rate that similar amounts of debt could currently be borrowed. Long-term debt would be classified as Level 2 in the fair value hierarchy. The carrying values of long-term debt with variable interest rates approximate fair value. |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Oct. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders' Equity The Company’s Board of Directors authorized the repurchase of up to 14.0 million shares of common stock under the Company's stock repurchase plan. This repurchase authorization is effective until terminated by the Board of Directors. During the three months ended October 31, 2017 , the Company repurchased 0.9 million shares for $42.6 million . As of October 31, 2017 , the Company had remaining authorization to repurchase 6.2 million shares under this plan. On November 17, 2017, the Company's Board of Directors declared a cash dividend in the amount of 18.0 cents per common share, payable December 21, 2017, to shareholders of record as of December 6, 2017. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Oct. 31, 2017 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive loss by component for the three months ended October 31, 2017 and 2016 are as follows (in millions): Foreign (1) Pension Derivative Total Balance as of July 31, 2017, net of tax $ (58.8 ) $ (95.1 ) $ (3.1 ) $ (157.0 ) Other comprehensive (loss) income before reclassifications and tax (5.1 ) — 3.1 (2.0 ) Tax expense — — (1.5 ) (1.5 ) Other comprehensive (loss) income before reclassifications, net of tax (5.1 ) — 1.6 (3.5 ) Reclassifications, before tax — 1.3 1.1 2.4 Tax expense — (0.5 ) (0.4 ) (0.9 ) Reclassifications, net of tax — 0.8 (2) 0.7 (3) 1.5 Other comprehensive (loss) income, net of tax (5.1 ) 0.8 2.3 (2.0 ) Balance as of October 31, 2017, net of tax $ (63.9 ) $ (94.3 ) $ (0.8 ) $ (159.0 ) Balance as of July 31, 2016, net of tax $ (89.3 ) $ (115.8 ) $ (0.5 ) $ (205.6 ) Other comprehensive (loss) income before reclassifications and tax (12.4 ) — 1.6 (10.8 ) Tax expense — — (0.5 ) (0.5 ) Other comprehensive (loss) income before reclassifications, net of tax (12.4 ) — 1.1 (11.3 ) Reclassifications, before tax — 3.4 (0.1 ) 3.3 Tax expense — (1.0 ) — (1.0 ) Reclassifications, net of tax — 2.4 (2) (0.1 ) (3) 2.3 Other comprehensive (loss) income, net of tax (12.4 ) 2.4 1.0 (9.0 ) Balance as of October 31, 2016, net of tax $ (101.7 ) $ (113.4 ) $ 0.5 $ (214.6 ) (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. (2) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 8) 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. |
Guarantees
Guarantees | 3 Months Ended |
Oct. 31, 2017 | |
Guarantees [Abstract] | |
Guarantees | 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 October 31, 2017 , AFSI had $29.2 million of outstanding debt, of which the Company guarantees half. In addition, during the three months ended October 31, 2017 and 2016 , the Company recorded earnings from this equity method investment of $0.1 million and $0.6 million , respectively. During the three months ended October 31, 2017 and 2016 , the Company recorded royalty income related to AFSI of $1.9 million and $1.3 million , respectively, in other expense (income), net. As of October 31, 2017 and July 31, 2017 , the Company had a contingent liability for standby letters of credit totaling $8.5 million and $10.5 million , respectively, 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 contract terms as detailed in each letter of credit. As of October 31, 2017 and July 31, 2017 , there were no amounts drawn upon these letters of credit. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Oct. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies 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 estimated liability in its Condensed Consolidated Financial Statements is adequate in light of the probable and estimable outcomes. The recorded liabilities were not material to the Company’s results of operations, liquidity or financial position and the Company believes it is remote that the settlement of any of the currently identified claims or litigation will be materially in excess of what is accrued. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Oct. 31, 2017 | |
Segment Reporting, Measurement Disclosures [Abstract] | |
Segment Reporting | Segment Reporting The Company has identified two reportable segments: Engine Products and Industrial Products. Segment determination is based on the internal organization structure, management of operations and performance evaluation by management and the Company’s Board of Directors. Corporate and Unallocated includes corporate expenses determined to be non-allocable to the segments, such as interest income and interest expense. The Company has an internal measurement system to evaluate performance and allocate resources based on earnings before income taxes. The Company’s manufacturing facilities serve both reporting segments. Therefore, the Company uses an allocation methodology to assign costs and assets to the segments. A certain amount of costs and assets relate to general corporate purposes and are not assigned to either segment. 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 earnings before income taxes and other financial information shown below. Segment detail is summarized as follows (in millions): Three Months Ended 2017 2016 Net sales Engine Products segment $ 442.1 $ 353.9 Industrial Products segment 202.7 199.1 Total $ 644.8 $ 553.0 Earnings before income taxes Engine Products segment $ 63.6 $ 45.4 Industrial Products segment 30.0 38.3 Corporate and Unallocated (8.9 ) (4.0 ) Total $ 84.7 $ 79.7 There were no customers that accounted for over 10% of net sales for the three months ended October 31, 2017 or 2016 . There were no customers that accounted for over 10% of gross accounts receivable as of October 31, 2017 or July 31, 2017 . |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Oct. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | 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 (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 statement of earnings, comprehensive income, financial position and cash flows have been included and are of a normal recurring nature. Operating results for the three month period ended October 31, 2017 are not necessarily indicative of the results that may be expected for future periods. The year-end condensed balance sheet information was derived from the Company's audited financial statements but does not include all disclosures required by GAAP. For further information, refer to the Audited Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2017 . |
New Accounting Standards Recently Adopted and New Accounting Standards Not Yet Adopted | New Accounting Standards Recently Adopted In July 2015, the FASB issued Accounting Standards Update (ASU) 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory (ASU 2015-11), which amended the guidance requiring companies not using the last-in, first-out (LIFO) method to measure inventory at the lower of cost and net realizable value rather than the lower of cost or market. This accounting guidance was effective for the Company beginning in the first quarter of fiscal 2018 and did not have an impact on its Consolidated Financial Statements. In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). This update simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. ASU 2016-09 was effective for the Company beginning in the first quarter of fiscal 2018 and the guidance affecting the effective tax rate was adopted prospectively. The Condensed Consolidated Statements of Cash Flows is also presented retrospectively with the guidance of this new standard and, for the three months ended October 31, 2016 , resulted in an increase of $1.8 million to net cash provided by operating activities and a corresponding $1.8 million increase to net cash used in financing activities. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) (ASU 2016-15). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for the Company beginning in the first quarter of fiscal 2019. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company adopted ASU 2016-15 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements. In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16), which is intended to improve the accounting for the income tax consequences of intra-entity transfers of assets other than inventory. This update removes the current exception in GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. ASU 2016-16 is effective for the Company beginning in the first quarter of fiscal 2019 , and early adoption is permitted. The Company adopted ASU 2016-16 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718) (ASU 2017-09). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for the Company beginning in the first quarter of fiscal 2019, and early adoption is permitted. The Company adopted ASU 2017-09 in the first quarter of fiscal 2018 and it did not have an impact on its Consolidated Financial Statements. New Accounting Standards Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The guidance requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which an entity expects to be entitled in exchange for those goods or services. The guidance also requires expanded disclosures relating to the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Additionally, qualitative and quantitative disclosures are required about customer contracts, significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract. In 2016, the FASB issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12 and ASU 2016-20 to clarify, among other things, the implementation guidance related to principal versus agent considerations, identifying performance obligations and accounting for licenses of intellectual property. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2019 , and early adoption is permitted. The amendments in this update are to be applied on a retrospective basis, either to each prior reporting period presented or by presenting the cumulative effect of applying the update recognized at the date of initial application. The Company is evaluating the impact of the adoption of the standard on its Consolidated Financial Statements. A project team has been established and is conducting surveys of the businesses and performing revenue contract analyses to gather information and identify where potential differences could result in applying the requirements of the new standard. Based on the results of the surveys and contract analyses, the Company will assess the financial impact of the new standard on its Consolidated Financial Statements and determine the method of adoption. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (ASU 2016-02), which amends the guidance requiring companies to recognize assets and liabilities for leases with lease terms of more than twelve months. The new guidance will require companies to record both capital and operating leases on the balance sheet. This accounting guidance is effective for the Company beginning in the first quarter of fiscal 2020 on a modified retrospective basis, and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2016-02 on its Consolidated Financial Statements. In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business (ASU 2017-01). The new guidance provides a more robust framework to use in determining when a set of assets and activities is a business. The amendments provide more consistency in applying the guidance, reduce the costs of application and make the definition of a business more operable. ASU 2017-01 is effective for the Company beginning in the first quarter of fiscal 2019 . The Company does not expect the application of ASU 2017-01 will have a material impact on its Consolidated Financial Statements. In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715) (ASU 2017-07). The new guidance requires employers to disaggregate and present separately the current service cost component from the other components of net benefit cost within the consolidated statement of earnings. ASU 2017-07 is effective for the Company beginning in the first quarter of fiscal 2019 , and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2017-07 on its Consolidated Statements of Earnings. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12), which improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and make certain targeted improvements to simplify the application of the hedge accounting guidance. The guidance expands the ability to hedge non-financial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. ASU 2017-12 is effective for the Company beginning in the first quarter of fiscal 2020 , and early adoption is permitted. The Company is evaluating the impact of the adoption of ASU 2017-12 on its Consolidated Financial Statements. |
Supplemental Balance Sheet In24
Supplemental Balance Sheet Information (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Assets [Abstract] | |
Components Of Inventory | The components of inventory are as follows (in millions): October 31, July 31, Raw materials $ 105.6 $ 96.3 Work in process 20.8 19.7 Finished products 193.2 177.5 Inventories, net $ 319.6 $ 293.5 |
Components Of Property, Plant and Equipment | The components of property, plant and equipment are as follows (in millions): October 31, July 31, Land $ 20.5 $ 20.6 Buildings 293.6 292.5 Machinery and equipment 871.3 866.8 Construction in progress 56.8 48.9 Less: accumulated depreciation (758.4 ) (744.2 ) Property, plant and equipment, net $ 483.8 $ 484.6 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule Of Information Necessary To Calculate Basic And Diluted Net Earnings Per Common Share | The following table presents the information necessary to calculate basic and diluted net earnings per share (in millions, except per share amounts): Three Months Ended 2017 2016 Net earnings for basic and diluted earnings per share computation $ 60.9 $ 58.0 Weighted average common shares outstanding: Weighted average common shares – basic 130.8 133.4 Dilutive impact of share based awards 1.9 1.2 Weighted average common shares – diluted 132.7 134.6 Net earnings per share – basic $ 0.47 $ 0.43 Net earnings per share – diluted $ 0.46 $ 0.43 |
Goodwill and Other Intangible26
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Reconciliation Of Goodwill | The following is a reconciliation of goodwill for the three months ended October 31, 2017 (in millions): Engine Products Industrial Products Total Goodwill Balance as of July 31, 2017 $ 84.3 $ 153.8 $ 238.1 Goodwill acquired 0.6 — 0.6 Foreign exchange translation (0.1 ) (0.4 ) (0.5 ) Balance as of October 31, 2017 $ 84.8 $ 153.4 $ 238.2 |
Schedule of Finite-Lived Intangible Assets | The following is a reconciliation of intangible assets for the three months ended October 31, 2017 (in millions): Gross Carrying Amount Accumulated Amortization Net Intangible Assets Balance as of July 31, 2017 $ 106.6 $ (66.0 ) $ 40.6 Amortization expense — (1.4 ) (1.4 ) Foreign exchange translation (0.2 ) 0.2 — Balance as of October 31, 2017 $ 106.4 $ (67.2 ) $ 39.2 |
Warranty (Tables)
Warranty (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Standard Product Warranty Disclosure [Abstract] | |
Reconciliation Of Warranty Reserves | The following is a reconciliation of warranty reserves, included in other current liabilities and other long-term liabilities, for the three months ended October 31, 2017 and 2016 (in millions): Three Months Ended 2017 2016 Balance at beginning of period $ 14.6 $ 11.9 Accruals for warranties issued during the reporting period 0.7 0.7 Accruals related to pre-existing warranties (including changes in estimates) 0.9 3.8 Less: settlements made during the period (0.5 ) (1.0 ) Balance at end of period $ 15.7 $ 15.4 |
Stock Based Compensation (Table
Stock Based Compensation (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Share-based Compensation [Abstract] | |
Summary Of Stock Option Activity | The following table summarizes stock option activity during the three months ended October 31, 2017 : Options Outstanding Weighted Average Exercise Price Outstanding as of July 31, 2017 6,685,551 $ 32.60 Granted 809,550 $ 45.43 Exercised (181,826 ) $ 23.37 Canceled (8,330 ) $ 35.62 Outstanding as of October 31, 2017 7,304,945 $ 34.25 |
Summary Of Information Concerning Outstanding And Exercisable Options | The following table summarizes information concerning outstanding and exercisable options as of October 31, 2017 : Range of Exercise Prices Number Outstanding Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price of Outstanding Options Number Exercisable Weighted Average Exercise Price of Exercisable Options $ 0.00 to $22.69 1,129,408 1.71 $ 19.67 1,129,408 $ 19.67 $22.70 to $28.69 906,002 7.87 $ 27.90 315,426 $ 27.58 $28.70 to $34.69 1,444,975 4.15 $ 31.61 1,427,244 $ 31.61 $34.70 to $40.69 1,437,465 5.89 $ 37.03 1,153,628 $ 36.66 $40.70 and above 2,387,095 8.49 $ 43.47 697,995 $ 42.25 7,304,945 6.00 $ 34.25 4,723,701 $ 31.29 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Retirement Benefits, Description [Abstract] | |
Components Of Net Periodic Pension Costs | Net periodic benefit costs for the Company’s pension plans include the following components (in millions): Three Months Ended 2017 2016 Net periodic benefit costs: Service cost $ 2.0 $ 2.1 Interest cost 3.7 3.4 Expected return on assets (6.5 ) (6.6 ) Prior service cost amortization 0.1 0.1 Actuarial loss amortization 1.2 1.8 Net periodic benefit costs $ 0.5 $ 0.8 |
Accumulated Other Comprehensi30
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule Of Changes In Accumulated Other Comprehensive Loss | Changes in accumulated other comprehensive loss by component for the three months ended October 31, 2017 and 2016 are as follows (in millions): Foreign (1) Pension Derivative Total Balance as of July 31, 2017, net of tax $ (58.8 ) $ (95.1 ) $ (3.1 ) $ (157.0 ) Other comprehensive (loss) income before reclassifications and tax (5.1 ) — 3.1 (2.0 ) Tax expense — — (1.5 ) (1.5 ) Other comprehensive (loss) income before reclassifications, net of tax (5.1 ) — 1.6 (3.5 ) Reclassifications, before tax — 1.3 1.1 2.4 Tax expense — (0.5 ) (0.4 ) (0.9 ) Reclassifications, net of tax — 0.8 (2) 0.7 (3) 1.5 Other comprehensive (loss) income, net of tax (5.1 ) 0.8 2.3 (2.0 ) Balance as of October 31, 2017, net of tax $ (63.9 ) $ (94.3 ) $ (0.8 ) $ (159.0 ) Balance as of July 31, 2016, net of tax $ (89.3 ) $ (115.8 ) $ (0.5 ) $ (205.6 ) Other comprehensive (loss) income before reclassifications and tax (12.4 ) — 1.6 (10.8 ) Tax expense — — (0.5 ) (0.5 ) Other comprehensive (loss) income before reclassifications, net of tax (12.4 ) — 1.1 (11.3 ) Reclassifications, before tax — 3.4 (0.1 ) 3.3 Tax expense — (1.0 ) — (1.0 ) Reclassifications, net of tax — 2.4 (2) (0.1 ) (3) 2.3 Other comprehensive (loss) income, net of tax (12.4 ) 2.4 1.0 (9.0 ) Balance as of October 31, 2016, net of tax $ (101.7 ) $ (113.4 ) $ 0.5 $ (214.6 ) (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. (2) Primarily includes net amortization of prior service costs and actuarial losses included in net periodic benefit cost (see Note 8) 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. |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Oct. 31, 2017 | |
Segment Reporting, Measurement Disclosures [Abstract] | |
Summary Of Segment Detail | Segment detail is summarized as follows (in millions): Three Months Ended 2017 2016 Net sales Engine Products segment $ 442.1 $ 353.9 Industrial Products segment 202.7 199.1 Total $ 644.8 $ 553.0 Earnings before income taxes Engine Products segment $ 63.6 $ 45.4 Industrial Products segment 30.0 38.3 Corporate and Unallocated (8.9 ) (4.0 ) Total $ 84.7 $ 79.7 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Net cash provided by (used in) operating activities | $ 63.9 | $ 101.5 |
Net cash provided by (used in) financing activities | $ (1.9) | (57) |
Accounting Standards Update 2016-09 | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ||
Net cash provided by (used in) operating activities | 1.8 | |
Net cash provided by (used in) financing activities | $ 1.8 |
Acquisitions (Details)
Acquisitions (Details) $ in Millions | May 01, 2017USD ($) | Aug. 31, 2016USD ($) | Oct. 31, 2017USD ($) | Jul. 31, 2017USD ($)acquisition |
Business Acquisition [Line Items] | ||||
Goodwill | $ 238.2 | $ 238.1 | ||
Partmo | ||||
Business Acquisition [Line Items] | ||||
Business combination, consideration transferred | $ 12.1 | |||
Hy-Pro Corporation | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, percentage of voting interests acquired | 100.00% | |||
Business combination, consideration transferred | $ 21.9 | |||
Business Combination, Consideration Transferred, Cash Received, Goodwill Adjustment | $ 0.8 | |||
Industrias Partmo S.A. and Hy-Pro Corporation | ||||
Business Acquisition [Line Items] | ||||
Number of businesses acquired | acquisition | 2 | |||
Business combination, recognized identifiable assets acquired and liabilities assumes, tangible assets, net | $ 18.1 | |||
Finite-lived intangible assets acquired | 8.6 | |||
Goodwill | $ 7.3 | |||
Minimum | Industrias Partmo S.A. and Hy-Pro Corporation | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible asset, useful life | 7 years | |||
Maximum | Industrias Partmo S.A. and Hy-Pro Corporation | ||||
Business Acquisition [Line Items] | ||||
Finite-lived intangible asset, useful life | 20 years |
Supplemental Balance Sheet In34
Supplemental Balance Sheet Information (Inventory) (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Assets [Abstract] | ||
Raw materials | $ 105.6 | $ 96.3 |
Work in process | 20.8 | 19.7 |
Finished products | 193.2 | 177.5 |
Inventories, net | $ 319.6 | $ 293.5 |
Supplemental Balance Sheet In35
Supplemental Balance Sheet Information (Property, Plant and Equipment) (Details) - USD ($) $ in Millions | Oct. 31, 2017 | Jul. 31, 2017 |
Property, Plant and Equipment [Line Items] | ||
Less: accumulated depreciation | $ (758.4) | $ (744.2) |
Property, plant and equipment, net | 483.8 | 484.6 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 20.5 | 20.6 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 293.6 | 292.5 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | 871.3 | 866.8 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property, plant and equipment, gross | $ 56.8 | $ 48.9 |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Options excluded from the diluted net earnings per share calculation | 0 | 1.5 |
Earnings Per Share (Information
Earnings Per Share (Information Necessary To Calculate Basic And Diluted Net Earnings Per Common Share) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net earnings | $ 60.9 | $ 58 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 130.8 | 133.4 |
Dilutive impact of share based awards (in shares) | 1.9 | 1.2 |
Diluted (in shares) | 132.7 | 134.6 |
Basic earnings per share (in usd per share) | $ 0.47 | $ 0.43 |
Diluted net earnings per share (in usd per share) | $ 0.46 | $ 0.43 |
Goodwill and Other Intangible38
Goodwill and Other Intangible Assets (Details) | 3 Months Ended |
Oct. 31, 2017USD ($) | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, impairment loss | $ 0 |
Goodwill and Other Intangible39
Goodwill and Other Intangible Assets (Reconciliation Of Goodwill) (Details) $ in Millions | 3 Months Ended |
Oct. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Balance as of July 31, 2017 | $ 238.1 |
Goodwill acquired | 0.6 |
Foreign exchange translation | (0.5) |
Balance as of October 31, 2017 | 238.2 |
Engine Products | |
Goodwill [Roll Forward] | |
Balance as of July 31, 2017 | 84.3 |
Goodwill acquired | 0.6 |
Foreign exchange translation | (0.1) |
Balance as of October 31, 2017 | 84.8 |
Industrial Products segment | |
Goodwill [Roll Forward] | |
Balance as of July 31, 2017 | 153.8 |
Goodwill acquired | 0 |
Foreign exchange translation | (0.4) |
Balance as of October 31, 2017 | $ 153.4 |
Goodwill and Other Intangible40
Goodwill and Other Intangible Assets (Reconciliation of Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Jul. 31, 2017 | |
Finite-lived Intangible Assets [Roll Forward] | ||
Finite-lived intangible assets, gross | $ 106.4 | $ 106.6 |
Finite-lived intangible assets, accumulated amortization | (67.2) | (66) |
Amortization expense | (1.4) | |
Finite lived intangible assets, foreign currency translation gain (loss), gross | (0.2) | |
Finite lived intangible assets, foreign currency translation gain (loss) | 0.2 | |
Finite-lived intangible assets, net | $ 39.2 | $ 40.6 |
Warranty (Details)
Warranty (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Movement in Standard and Extended Product Warranty, Increase (Decrease) [Roll Forward] | ||
Balance at beginning of period | $ 14.6 | $ 11.9 |
Accruals for warranties issued during the reporting period | 0.7 | 0.7 |
Accruals related to pre-existing warranties (including changes in estimates) | 0.9 | 3.8 |
Less: settlements made during the period | (0.5) | (1) |
Balance at end of period | $ 15.7 | $ 15.4 |
Stock Based Compensation (Detai
Stock Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Options granted (in shares) | 809,550 | |
Options granted, grant date fair value (in usd per share) | $ 9.18 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures | 0 | |
Pre-tax stock-based compensation expense associated with stock options | $ 3.8 | $ 1.1 |
Tax benefit associated with stock options | 1.2 | 0.3 |
Total intrinsic value of options exercised | 4.2 | $ 3.4 |
Aggregate intrinsic value of options outstanding | 94.7 | |
Aggregate intrinsic value of options exercisable | 75.2 | |
2010 Master Stock Incentive Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense related to non-vested stock options granted | $ 10.9 |
Stock Based Compensation (Summa
Stock Based Compensation (Summary Of Stock Option Activity) (Details) | 3 Months Ended |
Oct. 31, 2017$ / sharesshares | |
Options Outstanding | |
Beginning balance (in shares) | shares | 6,685,551 |
Options granted (in shares) | shares | 809,550 |
Options exercised (in shares) | shares | (181,826) |
Options canceled (in shares) | shares | (8,330) |
Ending balnace (in shares) | shares | 7,304,945 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price, Beginning Balance (in usd per share) | $ / shares | $ 32.60 |
Weighted Average Exercise Price, Granted (in usd per share) | $ / shares | 45.43 |
Weighted Average Exercise Price, Exercised (in usd per share) | $ / shares | 23.37 |
Weighted Average Exercise Price, Canceled (in usd per share) | $ / shares | 35.62 |
Weighted Average Exercise Price, Ending Balance (in usd per share) | $ / shares | $ 34.25 |
Stock Based Compensation (Sum44
Stock Based Compensation (Summary Of Information Concerning Outstanding And Exercisable Options) (Details) - $ / shares | 3 Months Ended | |
Oct. 31, 2017 | Jul. 31, 2017 | |
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Number Outstanding (in shares) | 7,304,945 | 6,685,551 |
Weighted Average Remaining Contractual Life (Years) | 6 years | |
Weighted Average Exercise Price of Outstanding Options (in usd per share) | $ 34.25 | |
Number Exercisable (in shares) | 4,723,701 | |
Weighted Average Exercise Price of Exercisable Options (in usd per share) | $ 31.29 | |
$ 0.00 to $22.69 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Range of Exercise Prices, lower range (in usd per share) | 0 | |
Range of Exercise Prices, upper range (in usd per share) | $ 22.69 | |
Number Outstanding (in shares) | 1,129,408 | |
Weighted Average Remaining Contractual Life (Years) | 1 year 8 months 16 days | |
Weighted Average Exercise Price of Outstanding Options (in usd per share) | $ 19.67 | |
Number Exercisable (in shares) | 1,129,408 | |
Weighted Average Exercise Price of Exercisable Options (in usd per share) | $ 19.67 | |
$22.70 to $28.69 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Range of Exercise Prices, lower range (in usd per share) | 22.7 | |
Range of Exercise Prices, upper range (in usd per share) | $ 28.69 | |
Number Outstanding (in shares) | 906,002 | |
Weighted Average Remaining Contractual Life (Years) | 7 years 10 months 13 days | |
Weighted Average Exercise Price of Outstanding Options (in usd per share) | $ 27.90 | |
Number Exercisable (in shares) | 315,426 | |
Weighted Average Exercise Price of Exercisable Options (in usd per share) | $ 27.58 | |
$28.70 to $34.69 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Range of Exercise Prices, lower range (in usd per share) | 28.7 | |
Range of Exercise Prices, upper range (in usd per share) | $ 34.69 | |
Number Outstanding (in shares) | 1,444,975 | |
Weighted Average Remaining Contractual Life (Years) | 4 years 1 month 24 days | |
Weighted Average Exercise Price of Outstanding Options (in usd per share) | $ 31.61 | |
Number Exercisable (in shares) | 1,427,244 | |
Weighted Average Exercise Price of Exercisable Options (in usd per share) | $ 31.61 | |
$34.70 to $40.69 | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Range of Exercise Prices, lower range (in usd per share) | 34.7 | |
Range of Exercise Prices, upper range (in usd per share) | $ 40.69 | |
Number Outstanding (in shares) | 1,437,465 | |
Weighted Average Remaining Contractual Life (Years) | 5 years 10 months 21 days | |
Weighted Average Exercise Price of Outstanding Options (in usd per share) | $ 37.03 | |
Number Exercisable (in shares) | 1,153,628 | |
Weighted Average Exercise Price of Exercisable Options (in usd per share) | $ 36.66 | |
$40.70 and above | ||
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items] | ||
Range of Exercise Prices, lower range (in usd per share) | $ 40.7 | |
Number Outstanding (in shares) | 2,387,095 | |
Weighted Average Remaining Contractual Life (Years) | 8 years 5 months 27 days | |
Weighted Average Exercise Price of Outstanding Options (in usd per share) | $ 43.47 | |
Number Exercisable (in shares) | 697,995 | |
Weighted Average Exercise Price of Exercisable Options (in usd per share) | $ 42.25 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) $ in Millions | 3 Months Ended |
Oct. 31, 2017USD ($)plan | |
Defined Benefit Plan Disclosure [Line Items] | |
Number of U.S. plans | plan | 2 |
Annual company retirement contribution in addition to 401 (k) match, percent | 3.00% |
Pension Plan | United States | |
Defined Benefit Plan Disclosure [Line Items] | |
Company contributions | $ 1.2 |
Estimated future contributions to pension plans | 3.7 |
Pension Plan | Foreign Plan | |
Defined Benefit Plan Disclosure [Line Items] | |
Company contributions | 0.3 |
Additional future contribution towards pension plans for the remainder of Fiscal 2018 | $ 1 |
Employee Benefit Plans (Compone
Employee Benefit Plans (Components Of Net Periodic Pension Costs) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Net periodic benefit costs: | ||
Service cost | $ 2 | $ 2.1 |
Interest cost | 3.7 | 3.4 |
Expected return on assets | (6.5) | (6.6) |
Prior service cost amortization | 0.1 | 0.1 |
Actuarial loss amortization | 1.2 | 1.8 |
Net periodic benefit costs | $ 0.5 | $ 0.8 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended |
Oct. 31, 2017USD ($) | |
Income Tax Disclosure [Abstract] | |
Unrecognized tax benefits | $ 19,600,000 |
Accrued interest and penalties on unrecognized tax benefits | $ 2,500,000 |
Statute of limitations period, average, years | 5 years |
Maximum possible reduction in amount of unrecognized tax benefits | $ 2,600,000 |
Unrecognized tax benefits potential expiration period | 12 months |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Long-term Debt [Member] $ in Millions | Oct. 31, 2017USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Debt instrument, fair value disclosure | $ 303.4 |
Debt carrying value | $ 300 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Nov. 17, 2017 | Oct. 31, 2017 | Oct. 31, 2016 |
Subsequent Event [Line Items] | |||
Number of shares authorized to be repurchased (in shares) | 14,000,000 | ||
Stock repurchased during the period (in shares) | 900,000 | ||
Payments for Repurchase of Common Stock | $ 42.6 | $ 41.4 | |
Shares with remaining authorization for repurchase under stock repurchase plan (in shares) | 6,200,000 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Cash dividend declared per common share (in usd per share) | $ 0.180 |
Accumulated Other Comprehensi50
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | $ 854.5 | |
Ending Balance | 881 | |
Foreign Currency Translation Adjustment | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (58.8) | $ (89.3) |
Other comprehensive (loss) income before reclassifications and tax | (5.1) | (12.4) |
Tax benefit (expense) | 0 | 0 |
Other comprehensive (loss) income before reclassifications, net of tax | (5.1) | (12.4) |
Reclassifications, before tax | 0 | 0 |
Tax benefit (expense) | 0 | 0 |
Reclassifications, net of tax | 0 | 0 |
Other comprehensive (loss) income, net of tax | (5.1) | (12.4) |
Ending Balance | (63.9) | (101.7) |
Pension Benefits | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (95.1) | (115.8) |
Other comprehensive (loss) income before reclassifications and tax | 0 | 0 |
Tax benefit (expense) | 0 | 0 |
Other comprehensive (loss) income before reclassifications, net of tax | 0 | 0 |
Reclassifications, before tax | 1.3 | 3.4 |
Tax benefit (expense) | (0.5) | (1) |
Reclassifications, net of tax | 0.8 | 2.4 |
Other comprehensive (loss) income, net of tax | 0.8 | 2.4 |
Ending Balance | (94.3) | (113.4) |
Derivative Financial Instruments | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (3.1) | (0.5) |
Other comprehensive (loss) income before reclassifications and tax | 3.1 | 1.6 |
Tax benefit (expense) | (1.5) | (0.5) |
Other comprehensive (loss) income before reclassifications, net of tax | 1.6 | 1.1 |
Reclassifications, before tax | 1.1 | (0.1) |
Tax benefit (expense) | (0.4) | 0 |
Reclassifications, net of tax | 0.7 | (0.1) |
Other comprehensive (loss) income, net of tax | 2.3 | 1 |
Ending Balance | (0.8) | 0.5 |
Total | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | ||
Beginning Balance | (157) | (205.6) |
Other comprehensive (loss) income before reclassifications and tax | (2) | (10.8) |
Tax benefit (expense) | (1.5) | (0.5) |
Other comprehensive (loss) income before reclassifications, net of tax | (3.5) | (11.3) |
Reclassifications, before tax | 2.4 | 3.3 |
Tax benefit (expense) | (0.9) | (1) |
Reclassifications, net of tax | 1.5 | 2.3 |
Other comprehensive (loss) income, net of tax | (2) | (9) |
Ending Balance | $ (159) | $ (214.6) |
Guarantees (Details)
Guarantees (Details) - USD ($) | 3 Months Ended | ||
Oct. 31, 2017 | Oct. 31, 2016 | Jul. 31, 2017 | |
Guarantor Obligations [Line Items] | |||
Contingent liability for standby letters of credit, issued and outstanding | $ 8,500,000 | $ 10,500,000 | |
Amount drawn upon letters of credit | 0 | $ 0 | |
Advanced Filtration Systems, Inc. | |||
Guarantor Obligations [Line Items] | |||
Outstanding debt of joint venture | 29,200,000 | ||
Joint venture investment earnings (loss) | 100,000 | $ 600,000 | |
Royalty income | $ 1,900,000 | $ 1,300,000 |
Segment Reporting (Details)
Segment Reporting (Details) | 3 Months Ended | ||
Oct. 31, 2017customersegment | Oct. 31, 2016customer | Jul. 31, 2017customer | |
Segment Reporting, Measurement Disclosures [Abstract] | |||
Number of reportable segments | segment | 2 | ||
Number of customers accounting for over ten percent of net sales | 0 | 0 | |
Number of customers accounting for over ten percent of gross accounts receivable | 0 | 0 |
Segment Reporting (Summary Of S
Segment Reporting (Summary Of Segment Detail) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Oct. 31, 2017 | Oct. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 644.8 | $ 553 |
Earnings before income taxes | 84.7 | 79.7 |
Operating Segments | Engine Products segment | ||
Segment Reporting Information [Line Items] | ||
Net sales | 442.1 | 353.9 |
Earnings before income taxes | 63.6 | 45.4 |
Operating Segments | Industrial Products segment | ||
Segment Reporting Information [Line Items] | ||
Net sales | 202.7 | 199.1 |
Earnings before income taxes | 30 | 38.3 |
Corporate, Non-Segment | Corporate and Unallocated | ||
Segment Reporting Information [Line Items] | ||
Earnings before income taxes | $ (8.9) | $ (4) |