Document and Entity Information

9 Months Ended

Sep. 30, 2017

Oct. 25, 2017

Document and Entity Information [Abstract]

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Sep. 30, 2017

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Q3

Entity Registrant Name

BARNES GROUP INC

Entity Central Index Key

0000009984

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Entity Common Stock, Shares Outstanding

53,610,570

Consolidated Statements of Income (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Income Statement [Abstract]

Net sales

$ 357,156

$ 311,561

$ 1,063,451

$ 906,586

Cost of sales

236,016

198,600

692,355

582,028

Selling and administrative expenses

73,354

61,144

210,423

183,754

Total operating costs and expenses

309,370

259,744

902,778

765,782

Operating income

47,786

51,817

160,673

140,804

Interest expense

3,748

3,020

10,638

8,826

Other expense (income), net

357

621

773

24

Income before income taxes

43,681

48,176

149,262

131,954

Income taxes

8,348

11,348

30,599

33,066

Net income

$ 35,333

$ 36,828

$ 118,663

$ 98,888

Per common share:

Basic (in dollars per share)

$ 0.65

$ 0.68

$ 2.19

$ 1.82

Diluted (in dollars per share)

$ 0.65

$ 0.67

$ 2.17

$ 1.81

Dividends (in dollars per share)

$ 0.14

$ 0.13

$ 0.41

$ 0.38

Weighted average common shares outstanding:

Basic (in shares)

54,066,509

54,206,064

54,140,551

54,206,798

Diluted (in shares)

54,570,677

54,572,315

54,649,723

54,643,739

Consolidated Statements of Comprehensive Income (USD $)

In Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Statement of Comprehensive Income [Abstract]

Net income

$ 35,333

$ 36,828

$ 118,663

$ 98,888

Other comprehensive income, net of tax

Unrealized gains (losses) on hedging activities, net of tax (1)

335 ¹

(150)¹

(124)¹

(580)¹

Foreign currency translation adjustments, net of tax (2)

20,004 ²

990 ²

80,174 ²

2,100 ²

Defined benefit pension and other postretirement benefits, net of tax (3)

1,640 ³

2,042 ³

3,576 ³

5,740 ³

Total other comprehensive income, net of tax

21,979

2,882

83,626

7,260

Total comprehensive income

57,312

39,710

202,289

106,148

Unrealized (loss) income on hedging activities, tax

125

1

(87)

(141)

Foreign currency translation adjustment, tax

146

31

526

105

Defined benefit pension and other postretirement benefits, tax

$ 946

$ 977

$ 2,749

$ 2,930

[1] Net of tax of $125 and $1 for the three months ended September 30, 2017 and 2016, respectively, and $(87) and $(141) for the nine months ended September 30, 2017 and 2016, respectively.

[2] Net of tax of $146 and $31 for the three months ended September 30, 2017 and 2016, respectively, and $526 and $105 for the nine months ended September 30, 2017 and 2016, respectively.

[3] Net of tax of $946 and $977 for the three months ended September 30, 2017 and 2016, respectively, and $2,749 and $2,930 for the nine months ended September 30, 2017 and 2016, respectively.

Consolidated Balance Sheets (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Current assets

Cash and cash equivalents

$ 134,471

$ 66,447

Accounts receivable, less allowances (2017 - $4,495; 2016 - $3,992)

325,189

287,123

Inventories

252,502

227,759

Prepaid expenses and other current assets

31,591

27,163

Total current assets

743,753

608,492

Deferred income taxes

31,942

25,433

Property, plant and equipment

825,705

762,187

Less accumulated depreciation

(471,760)

(427,698)

Property, plant and equipment, net

353,945

334,489

Goodwill

685,990

633,436

Other intangible assets, net

514,331

522,258

Other assets

16,570

13,431

Total assets

2,346,531

2,137,539

Current liabilities

Notes and overdrafts payable

16,875

30,825

Accounts payable

127,750

112,024

Accrued liabilities

191,889

156,967

Long-term debt - current

1,689

2,067

Total current liabilities

338,203

301,883

Long-term debt

497,429

468,062

Accrued retirement benefits

91,803

109,350

Deferred income taxes

64,700

66,446

Other liabilities

24,795

23,440

Commitments and contingencies (Note 13)

Stockholders' equity

Common stock - par value $0.01 per share Authorized: 150,000,000 shares Issued: at par value (2017 - 62,987,803 shares; 2016 - 62,692,403 shares)

630

627

Additional paid-in capital

452,677

443,235

Treasury stock, at cost (2017 - 9,377,948 shares; 2016 - 8,889,947 shares)

(279,978)

(251,827)

Retained earnings

1,273,474

1,177,151

Accumulated other non-owner changes to equity

(117,202)

(200,828)

Total stockholders' equity

1,329,601

1,168,358

Total liabilities and stockholders' equity

$ 2,346,531

$ 2,137,539

Consolidated Balance Sheets (Parenthetical) (USD $)

In Thousands, except Share data, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Statement of Financial Position [Abstract]

Allowance for doubtful accounts

$ 4,495

$ 3,992

Common stock, par value (in dollars per share)

$ 0.01

Common stock, shares authorized (in shares)

150,000,000

Common stock, shares issued (in shares)

62,987,803

62,692,403

Treasury stock, at cost (in shares)

9,377,948

8,889,947

Consolidated Statements of Cash Flows (USD $)

In Thousands, unless otherwise specified

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Operating activities:

Net income

$ 118,663

$ 98,888

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

68,535

58,949

Gain on disposition of property, plant and equipment

(96)

(475)

Stock compensation expense

8,472

8,620

Changes in assets and liabilities, net of the effects of acquisitions:

Accounts receivable

(26,773)

(18,461)

Inventories

(11,454)

4,626

Prepaid expenses and other current assets

(2,398)

(296)

Accounts payable

14,134

9,799

Accrued liabilities

28,889

13,028

Deferred income taxes

(18,063)

998

Long-term retirement benefits

(11,469)

(16,026)

Other

(677)

461

Net cash provided by operating activities

167,763

160,111

Investing activities:

Proceeds from disposition of property, plant and equipment

401

715

Capital expenditures

(41,957)

(32,920)

Business acquisitions, net of cash acquired

(8,922)

(120,675)

Component Repair Program payments

0

(900)

Other

(3,000)

0

Net cash used by investing activities

(53,478)

(153,780)

Financing activities:

Net change in other borrowings

(14,103)

(9,321)

Payments on long-term debt

(60,897)

(263,578)

Proceeds from the issuance of long-term debt

89,118

288,982

Proceeds from the issuance of common stock

1,731

2,463

Common stock repurchases

(23,300)

(15,660)

Dividends paid

(22,042)

(20,444)

Withholding taxes paid on stock issuances

(4,851)

(4,881)

Other

(17,773)

3,406

Net cash used by financing activities

(52,117)

(19,033)

Effect of exchange rate changes on cash flows

5,856

717

Increase (decrease) in cash and cash equivalents

68,024

(11,985)

Cash and cash equivalents at beginning of period

66,447

83,926

Cash and cash equivalents at end of period

134,471

71,941

Recognition of liabilities with FOBHOA acquisition

$ 12,436

Summary of Significant Accounting Policies

The accompanying unaudited consolidated balance sheet and the related unaudited consolidated statements of income, comprehensive income and cash flows have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The consolidated financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. The balance sheet as of December 31, 2016 has been derived from the 2016 financial statements of Barnes Group Inc. (the “Company”). For additional information, please refer to the consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2016. In the opinion of management, all adjustments, including normal recurring accruals considered necessary for a fair statement of the results, have been included. Operating results for the nine-month period ended September 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

Acquisition

On April 3, 2017, the Company completed its acquisition of the assets of the privately held Gammaflux L.P. business ("Gammaflux"), a leading supplier of hot runner temperature and sequential valve gate control systems to the plastics industry. Gammaflux, which is headquartered in Sterling, Virginia and has offices in Illinois and Germany, provides temperature control solutions for injection molding, extrusion, blow molding, thermoforming, and other applications. Its end markets include packaging, electronics, automotive, household products, medical, and tool building. The Company acquired the assets of Gammaflux for an aggregate purchase price of $8,866, which was financed using cash on hand and borrowings under the Company's revolving credit facility. The purchase price includes adjustments under the terms of the Asset Purchase Agreement ("APA"), including $2 related to cash acquired. In connection with the acquisition, the Company recorded $1,535 of goodwill and $3,700 of intangible assets.

During the nine months ended September 30, 2017, the Company incurred $184 of acquisition-related costs related to the Gammaflux acquisition. These costs include due diligence costs and transaction costs to complete the acquisition and have been recognized in the Consolidated Statements of Income as selling and administrative expenses.

The operating results of Gammaflux have been included in the Consolidated Statements of Income since the date of acquisition. The Company reported $6,483 in net sales for the period from the acquisition date through September 30, 2017. Gammaflux results have been included within the Industrial segment.

Net Income Per Common Share

For the purpose of computing diluted net income per common share, the weighted-average number of common shares outstanding is increased for the potential dilutive effects of stock-based incentive plans. For the purpose of computing diluted net income per common share, the weighted-average number of common shares outstanding increased by 504,168 and 366,251 for the three-month periods ended September 30, 2017 and 2016, respectively, and by 509,172 and 436,941 for the nine-month periods ended September 30, 2017 and 2016, respectively, to account for the potential dilutive effect of stock-based incentive plans. There were no adjustments to net income for the purposes of computing income available to common stockholders for the periods.

The calculation of weighted-average diluted shares outstanding excludes all shares that would have been anti-dilutive. During the three-month periods ended September 30, 2017 and 2016, the Company excluded 0 and 209,907 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive. During the nine-month periods ended September 30, 2017 and 2016, the Company excluded 59,261 and 346,468 stock awards, respectively, from the calculation of weighted-average diluted shares outstanding as the stock awards were considered anti-dilutive.

The Company granted 125,300 stock options, 85,307 restricted stock unit awards and 83,970 performance share awards ("PSAs") in February 2017 as part of its annual grant awards. All of the stock options and the restricted stock unit awards vest upon meeting certain service conditions. The restricted stock unit awards are included in basic weighted-average common shares outstanding as they contain nonforfeitable rights to dividend payments. The PSAs are part of the long-term Performance Share Award Program (the "Awards Program") and are based on performance goals that are driven by a combination of independently measured metrics (depending on the grant year) with each metric being weighted equally. The metrics for awards granted in 2016 and 2017 include the Company’s total shareholder return (“TSR”) and return on invested capital (“ROIC”). The TSR metric is designed to assess the long-term Company performance relative to the performance of companies included in the Russell 2000 Index over a three-year performance period. The ROIC metric is measured based on pre-established Company targets over the same period. The participants can earn from zero to 250% of the target award and the award includes a forfeitable right to dividend equivalents, which are not included in the aggregate target award numbers. The fair value of the TSR portion of the PSA was determined using a Monte Carlo valuation method as the award contains a market condition.

Inventories

The components of inventories consisted of:



	September 30, 2017		December 31, 2016
Finished goods	$	78,116	$	71,100
Work-in-process	110,204		98,246
Raw material and supplies	64,182		58,413
	$	252,502	$	227,759

Goodwill and Other Intangible Assets

Goodwill:

The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended September 30, 2017:



	Industrial		Aerospace		Total Company
January 1, 2017	$	602,650	$	30,786	$	633,436
Acquisition related	3,330		—		3,330
Foreign currency translation	49,224		—		49,224
September 30, 2017	$	655,204	$	30,786	$	685,990

In the second quarter of 2017, management performed its annual impairment testing of goodwill. Based on this assessment, there was no goodwill impairment recognized as of June 30, 2017.

Other Intangible Assets:

Other intangible assets consisted of:



		September 30, 2017						December 31, 2016
	Range of Life -Years	Gross Amount			Accumulated Amortization			Gross Amount			Accumulated Amortization
Amortized intangible assets:
Revenue sharing programs (RSPs)	Up to 30	$	293,700		$	(105,054	)	$	293,700		$	(95,701	)
Component repair programs (CRPs)	Up to 30	111,839			(15,112		)	111,839			(10,497		)
Customer lists/relationships	10-16	215,966			(62,250		)	215,266			(53,198		)
Patents and technology	4-14	87,052			(45,428		)	84,052			(37,897		)
Trademarks/trade names	10-30	11,950			(10,258		)	11,950			(9,967		)
Other	Up to 15	20,551			(16,960		)	20,551			(16,338		)
		741,058			(255,062		)	737,358			(223,598		)
Unamortized intangible assets:
Trade names		42,770			—			42,770			—
Foreign currency translation		(14,435		)	—			(34,272		)	—
Other intangible assets		$	769,393		$	(255,062	)	$	745,856		$	(223,598	)

Estimated amortization of intangible assets for future periods is as follows: 2017 - $41,000; 2018 - $41,000; 2019 - $40,000; 2020 - $37,000 and 2021 - $36,000.

In the second quarter of 2017 management performed its annual impairment testing of its trade names, indefinite-lived intangible assets. Based on this assessment, there was no impairment recognized as of June 30, 2017.

Debt

The Company's debt agreements contain financial covenants that require the maintenance of interest coverage and leverage ratios. The Company is in compliance with its financial covenants as of September 30, 2017, and continues to monitor its future compliance based on current and anticipated future economic conditions.

Long-term debt and notes and overdrafts payable at September 30, 2017 and December 31, 2016 consisted of:



	September 30, 2017					December 31, 2016
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
Revolving credit agreement	$	393,000		$	397,805	$	363,300		$	364,775
3.97% Senior Notes	100,000			103,319		100,000			101,598
Borrowings under lines of credit and overdrafts	16,875			16,875		30,825			30,825
Capital leases	4,882			5,314		5,413			5,902
Other foreign bank borrowings	1,236			1,249		1,416			1,428
	515,993			524,562		500,954			504,528
Less current maturities	(18,564		)			(32,892		)
Long-term debt	$	497,429				$	468,062

In February 2017, the Company and certain of its subsidiaries entered into the fourth amendment of its fifth amended and restated revolving credit agreement (the “Amended Credit Agreement”) and retained Bank of America, N.A as the Administrative Agent for the lenders. The Amended Credit Agreement increases the facility from $750,000 to $850,000 and extends the maturity date from September 2018 to February 2022. The Amended Credit Agreement also increases the existing accordion feature from $250,000, allowing the Company to now request additional borrowings of up to $350,000. The Company may exercise the accordion feature upon request to the Administrative Agent as long as an event of default has not occurred or is not continuing. The borrowing availability of $850,000, pursuant to the terms of the Amended Credit Agreement, allows for multi-currency borrowing which includes euro, sterling or Swiss franc borrowing, up to $600,000. Depending on the Company’s consolidated leverage ratio, and at the election of the Company, borrowings under the Amended Credit Agreement will bear interest at either LIBOR plus a margin of between 1.10% and 1.70% or the base rate, as defined in the Amended Credit Agreement, plus a margin of 0.10% to 0.70%. The Company paid fees and expenses of $2,542 in conjunction with executing the Amended Credit Agreement; such fees have been deferred within Other Assets on the accompanying Consolidated Balance Sheets and are being amortized into interest expense on the accompanying Consolidated Statements of Income through its maturity. Cash used to pay these fees have been recorded through other financing activities on the Consolidated Statements of Cash Flows.

Borrowings and availability under the Amended Credit Agreement were $393,000 and $457,000, respectively, at September 30, 2017 and $363,300 and $386,700, respectively, at December 31, 2016. The average interest rate on these borrowings was 2.34% and 1.86% on September 30, 2017 and December 31, 2016, respectively. The fair value of the borrowings is based on observable Level 2 inputs. The borrowings were valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

In October 2014, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”), among the Company and New York Life Insurance Company, New York Life Insurance and Annuity Corporation and New York Life Insurance and Annuity Corporation Institutionally Owned Life Insurance Separate Account, as purchasers, for the issuance of $100,000 aggregate principal amount of 3.97% Senior Notes due October 17, 2024 (the “3.97% Senior Notes”).

The 3.97% Senior Notes are senior unsecured obligations of the Company and pay interest semi-annually on April 17 and October 17 of each year at an annual rate of 3.97%. The 3.97% Senior Notes will mature on October 17, 2024 unless earlier prepaid in accordance with their terms. Subject to certain conditions, the Company may, at its option, prepay all or any part of the 3.97% Senior Notes in an amount equal to 100% of the principal amount of the 3.97% Senior Notes so prepaid, plus any accrued and unpaid interest to the date of prepayment, plus the Make-Whole Amount, as defined in the Note Purchase Agreement, with respect to such principal amount being prepaid. The fair value of the 3.97% Senior Notes was determined using the US Treasury yield and a long-term credit spread for similar types of borrowings that represent Level 2 observable inputs.

The Company's borrowing capacity remains limited by various debt covenants in the Amended Credit Agreement and the Note Purchase Agreement (the "Agreements"). The Agreements require the Company to maintain a ratio of Consolidated Senior Debt, as defined, to Consolidated EBITDA, as defined, of not more than 3.25 times ("Senior Debt Ratio"), a ratio of Consolidated Total Debt, as defined, to Consolidated EBITDA of not more than 3.75 times and a ratio of Consolidated EBITDA to Consolidated Cash Interest Expense, as defined, of not less than 4.25, in each case at the end of each fiscal quarter; provided that the debt to EBITDA ratios are permitted to increase for a period of four fiscal quarters after the closing of certain permitted acquisitions.

In addition, the Company has available approximately $59,000 in uncommitted short-term bank credit lines ("Credit Lines") and overdraft facilities. Under the Credit Lines, $16,800 was borrowed at September 30, 2017 at an interest rate of 2.05% and $30,700 was borrowed at December 31, 2016 at an average interest rate of 1.96%. The Company had also borrowed $75 and $125 under the overdraft facilities at September 30, 2017 and December 31, 2016, respectively. Repayments under the Credit Lines are due within one month after being borrowed. Repayments of the overdrafts are generally due within two days after being borrowed. The carrying amounts of the Credit Lines and overdrafts approximate fair value due to the short maturities of these financial instruments.

The Company has capital leases at the Thermoplay and Männer businesses. The fair value of the capital leases is based on observable Level 2 inputs. These instruments are valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

The Company also has other foreign bank borrowings. The fair value of the other foreign bank borrowings is based on observable Level 2 inputs. These instruments are valued using discounted cash flows based upon the Company's estimated interest costs for similar types of borrowings.

Derivatives

The Company has manufacturing and sales facilities around the world and thus makes investments and conducts business transactions denominated in various currencies. The Company is also exposed to fluctuations in interest rates and commodity price changes. These financial exposures are monitored and managed by the Company as an integral part of its risk management program.

Financial instruments have been used by the Company to hedge its exposure to fluctuations in interest rates. In 2012, the Company entered into five-year interest rate swap agreements (the "Swaps") transacted with three banks which together converted the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.03% plus the borrowing spread. The Swaps expired on April 28, 2017. The Company entered into a new interest rate swap agreement (the "Swap") that commenced on April 28, 2017, with one bank, and converts the interest on the first $100,000 of the Company's one-month LIBOR-based borrowings from a variable rate plus the borrowing spread to a fixed rate of 1.92% plus the borrowing spread. The Swap expires on January 31, 2022. These interest rate swap agreements are accounted for as cash flow hedges.

The Company also uses financial instruments to hedge its exposures to fluctuations in foreign currency exchange rates. The Company has various contracts outstanding which primarily hedge recognized assets or liabilities, and anticipated transactions in various currencies including the Euro, British pound sterling, U.S. dollar, Canadian dollar, Japanese yen, Singapore dollar, Korean won, Swedish kroner, Chinese renminbi and Swiss franc. Certain foreign currency derivative instruments are treated as cash flow hedges of forecasted transactions. All foreign exchange contracts are due within two years.

The Company does not use derivatives for speculative or trading purposes or to manage commodity exposures. Changes in the fair market value of derivatives that qualify as fair value hedges or cash flow hedges are recorded directly to earnings or accumulated other non-owner changes to equity, depending on the designation. Amounts recorded to accumulated other non-owner changes to equity are reclassified to earnings in a manner that matches the earnings impact of the hedged transaction. Any ineffective portion, or amounts related to contracts that are not designated as hedges, are recorded directly to earnings.

The Company's policy for classifying cash flows from derivatives is to report the cash flows consistent with the underlying hedged item. Other financing cash flows during the first nine months of 2017 and 2016, as presented on the consolidated statements of cash flows, include $14,962 of net cash payments and $3,822 of net cash proceeds, respectively, from the settlement of foreign currency hedges related to intercompany financing.

The following table sets forth the fair value amounts of derivative instruments held by the Company.



	September 30, 2017					December 31, 2016
	Asset Derivatives		Liability Derivatives			Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts	$	—	$	(345	)	$	—	$	(78	)
Foreign exchange contracts	—		(121		)	—		(177		)

Derivatives not designated as hedging instruments:
Foreign exchange contracts	65		(377		)	397		(1,499		)
Total derivatives	$	65	$	(843	)	$	397	$	(1,754	)

Asset derivatives are recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets. Liability derivatives related to interest rate contracts and foreign exchange contracts are recorded in other liabilities and accrued liabilities, respectively, in the accompanying Consolidated Balance Sheets.

The following table sets forth the gain (loss), net of tax, recorded in accumulated other comprehensive income (loss), net of tax, for the three- and nine-month periods ended September 30, 2017 and 2016 for derivatives held by the Company and designated as hedging instruments.



	Three months ended September 30,					Nine months ended September 30,
	2017		2016			2017			2016
Cash flow hedges:
Interest rate contracts	$	97	$	137		$	(167	)	$	74
Foreign exchange contracts	238		(287		)	43			(654		)
	$	335	$	(150	)	$	(124	)	$	(580	)

Amounts related to the interest rate swaps included within accumulated other comprehensive income (loss) that were reclassified to expense during the first nine months of 2017 and 2016 resulted in a fixed rate of interest plus the borrowing spread for the first $100,000 of one-month LIBOR borrowings. The fixed rate of interest was 1.92% for the period covered by the Swap, which matures in January 2022, and 1.03% for the Swaps, which matured in April 2017. Additionally, there were no amounts recognized in income for hedge ineffectiveness during the three- and nine-month periods ended September 30, 2017 and 2016.

The following table sets forth the net (loss) gain recorded in other expense (income), net in the consolidated statements of income for the three- and nine-month periods ended September 30, 2017 and 2016 for non-designated derivatives held by the Company. Such amounts were substantially offset by the net (gain) loss recorded on the underlying hedged asset or liability, also recorded in other expense (income), net.



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Foreign exchange contracts	$	(2,545	)	$	(3,755	)	$	(12,949	)	$	(7,506	)

Fair Value Measurements

The provisions of the accounting standard for fair value define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard classifies the inputs used to measure fair value into the following hierarchy:


Level 1	Unadjusted quoted prices in active markets for identical assets or liabilities


Level 2	Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability


Level 3	Unobservable inputs for the asset or liability

The following table provides the financial assets and financial liabilities reported at fair value and measured on a recurring basis:



				Fair Value Measurements Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
September 30, 2017
Asset derivatives	$	65		$	—	$	65		$	—
Liability derivatives	(843		)	—		(843		)	—
Bank acceptances	13,009			—		13,009			—
Rabbi trust assets	2,427			2,427		—			—
	$	14,658		$	2,427	$	12,231		$	—

December 31, 2016
Asset derivatives	$	397		$	—	$	397		$	—
Liability derivatives	(1,754		)	—		(1,754		)	—
Bank acceptances	9,690			—		9,690			—
Rabbi trust assets	2,216			2,216		—			—
	$	10,549		$	2,216	$	8,333		$	—

The derivative contracts are valued using observable current market information as of the reporting date such as the prevailing LIBOR-based interest rates and foreign currency spot and forward rates. Bank acceptances represent financial instruments accepted from certain Chinese customers in lieu of cash paid on receivables, generally range from three to six months in maturity and are guaranteed by banks. The carrying amounts of the bank acceptances, which are included within prepaid expenses and other current assets, approximate fair value due to their short maturities. The fair values of rabbi trust assets are based on quoted market prices from various financial exchanges.

Pension and Other Postretirement Benefits

Pension and other postretirement benefits expenses consisted of the following:



	Three months ended September 30,						Nine months ended September 30,
Pensions	2017			2016			2017			2016
Service cost	$	1,572		$	1,354		$	4,674		$	4,056
Interest cost	4,764			4,869			14,051			14,650
Expected return on plan assets	(7,206		)	(7,564		)	(20,882		)	(22,774		)
Amortization of prior service cost	110			52			330			157
Amortization of actuarial losses	2,703			2,697			7,846			8,109
Curtailment gain	—			—			(7,217		)	—
Settlement loss (gain)	298			—			(193		)	—
Net periodic benefit cost	$	2,241		$	1,408		$	(1,391	)	$	4,198

In June 2017, the Company authorized the closure of its FOBOHA facility located in Muri, Switzerland which resulted in pension curtailment and settlement gains of $7,217 and $230, respectively, during the second quarter of 2017. See Note 14 of the Consolidated Financial Statements for additional information related to the Closure.

In May 2017, the Company contributed $5,000 of discretionary contributions to its U.S Qualified pension plans. The Company currently does not plan to make any additional discretionary contributions to its U.S. Qualified pension plans, however approximately $5,000 is expected to be made into its U.S. Non-qualified and international pension plans throughout 2017.



	Three months ended September 30,						Nine months ended September 30,
Other Postretirement Benefits	2017			2016			2017			2016
Service cost	$	20		$	31		$	62		$	92
Interest cost	389			440			1,170			1,324
Amortization of prior service credit	(17		)	(93		)	(51		)	(280		)
Amortization of actuarial losses	68			134			207			401
Net periodic benefit cost	$	460		$	512		$	1,388		$	1,537

Income Taxes

The Company merged certain of its Swiss operating legal entities during the second quarter of 2017 (the "Merger"). Certain of these entities included businesses with deferred tax assets that were offset by valuation allowances. As a result of the Merger, the Company reevaluated the valuation allowances and deferred tax assets related to these businesses and determined such allowances were no longer required as the merged entities would more likely than not utilize previously unbenefited net operating losses that would have otherwise expired. In addition, certain deferred tax assets were adjusted as a result of higher income tax rates. The impacts of these adjustments were treated as discrete items in the second quarter of 2017 resulting in reductions in tax expense of $5,872 and $461, respectively.

The Company's effective tax rate for the first nine months of 2017 was 20.5% compared with 25.1% in the first nine months of 2016 and 25.7% for the full year 2016. The decrease in the first nine months of 2017 effective tax rate from the full year 2016 rate is primarily due to the adjustment of certain valuation reserves and other benefits resulting from the merger of legal entities in Switzerland, and the settlement of tax audits and closure of tax years for various tax jurisdictions, partially offset by the expiration of certain tax holidays.

The Aerospace and Industrial segments were previously awarded international tax holidays. All significant tax holidays for which the Company currently receives benefit are expected to expire in the fourth quarter of 2017.

Changes in Accumulated Other Comprehensive Income (Loss) by Component

The following table sets forth the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine-month periods ended September 30, 2017 and 2016:



	Gains and Losses on Cash Flow Hedges			Pension and Other Postretirement Benefit Items			Foreign Currency Items			Total
January 1, 2017	$	(227	)	$	(114,570	)	$	(86,031	)	$	(200,828	)
Other comprehensive (loss) income before reclassifications to consolidated statements of income	(501		)	(1,888		)	80,174			77,785
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	377			5,464			—			5,841
Net current-period other comprehensive (loss) income	(124		)	3,576			80,174			83,626
September 30, 2017	$	(351	)	$	(110,994	)	$	(5,857	)	$	(117,202	)



	Gains and Losses on Cash Flow Hedges			Pension and Other Postretirement Benefit Items			Foreign Currency Items			Total
January 1, 2016	$	115		$	(105,703	)	$	(37,664	)	$	(143,252	)
Other comprehensive (loss) income before reclassifications to consolidated statements of income	(823		)	283			2,100			1,560
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	243			5,457			—			5,700
Net current-period other comprehensive (loss) income	(580		)	5,740			2,100			7,260
September 30, 2016	$	(465	)	$	(99,963	)	$	(35,564	)	$	(135,992	)

The following table sets forth the reclassifications out of accumulated other comprehensive income (loss) by component for the three- and nine-month periods ended September 30, 2017 and 2016:



Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income
	Three months ended September 30, 2017			Three months ended September 30, 2016
Gains and losses on cash flow hedges
Interest rate contracts	$	(174	)	$	(137	)	Interest expense
Foreign exchange contracts	(40		)	(20		)	Net sales
	(214		)	(157		)	Total before tax
	74			55			Tax benefit
	(140		)	(102		)	Net of tax

Pension and other postretirement benefit items
Amortization of prior-service (costs) credits, net	$	(93	)	$	41		(A)
Amortization of actuarial losses	(2,771		)	(2,831		)	(A)
Settlement loss	(298		)	—			(A)
	(3,162		)	(2,790		)	Total before tax
	946			977			Tax benefit
	(2,216		)	(1,813		)	Net of tax

Total reclassifications in the period	$	(2,356	)	$	(1,915	)

(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic pension cost. See Note 9.



Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income
	Nine months ended September 30, 2017			Nine months ended September 30, 2016
Gains and losses on cash flow hedges
Interest rate contracts	$	(380	)	$	(437	)	Interest expense
Foreign exchange contracts	(178		)	40			Net sales
	(558		)	(397		)	Total before tax
	181			154			Tax benefit
	(377		)	(243		)	Net of tax

Pension and other postretirement benefit items
Amortization of prior-service (costs) credits, net	$	(279	)	$	123		(A)
Amortization of actuarial losses	(8,053		)	(8,510		)	(A)
Curtailment gain	187			—			(A)
Settlement loss	(68		)	—			(A)
	(8,213		)	(8,387		)	Total before tax
	2,749			2,930			Tax benefit
	(5,464		)	(5,457		)	Net of tax

Total reclassifications in the period	$	(5,841	)	$	(5,700	)

(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic pension cost. See Note 9.

Information on Business Segments

The Company is organized based upon the nature of its products and services and reports under two global business segments: Industrial and Aerospace. Segment information is consistent with how management reviews the businesses, makes investing and resource allocation decisions and assesses operating performance. The Company has not aggregated operating segments for purposes of identifying these two reportable segments.

The Industrial segment is a global manufacturer of highly-engineered, high-quality precision components, products and systems for critical applications serving a diverse customer base in end-markets such as transportation, industrial equipment, consumer products, packaging, electronics, medical devices, and energy. Focused on innovative custom solutions, Industrial participates in the design phase of components and assemblies whereby customers receive the benefits of application and systems engineering, new product development, testing and evaluation, and the manufacturing of final products. Products are sold primarily through its direct sales force and global distribution channels. Industrial's Molding Solutions businesses design and manufacture customized hot runner systems, advanced mold cavity sensors and process control systems, and precision high cavitation mold assemblies - collectively, the enabling technologies for many complex injection molding applications. Industrial's Nitrogen Gas Products business provides innovative cost effective force and motion solutions for sheet metal forming, heavy duty suspension and other selective niche markets for customers worldwide. Industrial's Engineered Components businesses manufacture and supply precision mechanical products used in transportation and industrial applications, including mechanical springs, high-precision punched and fine-blanked components and retention rings.

The Aerospace segment is a global provider of fabricated and precision-machined components and assemblies for original equipment manufacturer ("OEM") turbine engine, airframe and industrial gas turbine builders, and the military. Aerospace Aftermarket includes the jet engine component maintenance overhaul and repair business ("MRO") and the spare parts business. MRO includes our Component Repair Programs ("CRPs"), which service many of the world's major turbine engine manufacturers, commercial airlines and the military. The spare parts business includes our revenue sharing programs ("RSPs") under which the Company receives an exclusive right to supply designated aftermarket parts over the life of the related aircraft engine program.

The following tables set forth information about the Company's operations by its two reportable segments:



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Net sales
Industrial	$	240,390		$	208,748		$	719,556		$	608,534
Aerospace	116,767			102,816			343,899			298,055
Intersegment sales	(1		)	(3		)	(4		)	(3		)
Total net sales	$	357,156		$	311,561		$	1,063,451		$	906,586

Operating profit
Industrial	$	29,308		$	34,958		$	100,154		$	99,445
Aerospace	18,478			16,859			60,519			41,359
Total operating profit	47,786			51,817			160,673			140,804
Interest expense	3,748			3,020			10,638			8,826
Other expense (income), net	357			621			773			24
Income before income taxes	$	43,681		$	48,176		$	149,262		$	131,954



	September 30, 2017		December 31, 2016
Assets
Industrial	$	1,502,193	$	1,356,081
Aerospace	648,561		647,766
Other ^(A)	195,777		133,692
Total assets	$	2,346,531	$	2,137,539

(A) "Other" assets include corporate-controlled assets, the majority of which are cash and deferred tax assets.

Commitments and Contingencies

Product Warranties

The Company provides product warranties in connection with the sale of certain products. From time to time, the Company is subject to customer claims with respect to product warranties. The Company accrues its estimated exposure for warranty claims at the time of sale based upon the length of the warranty period, historical experience and other related information known to the Company. Liabilities related to product warranties and extended warranties were not material as of September 30, 2017 and December 31, 2016.

Business Reorganization

In June 2017, the Company authorized the closure and consolidation of two production facilities (the "Closures") including a FOBOHA facility located in Muri, Switzerland (60 employees) and an Associated Spring facility (30 employees) into other facilities included within the Industrial segment to leverage capacity, infrastructure and critical resources. The Company recorded a net pre-tax gain of $1,392 in the first nine months of 2017 related to the Closures. This balance includes pension curtailment and settlement gains of $7,217 and $230, respectively, partially offset by employee severance charges of $3,756 and other Closure costs of $2,299, primarily related to asset write-downs. The severance liability was included within Accrued Liabilities as of September 30, 2017. The Company also expects to incur additional costs of approximately $700 in 2017 related to the Closures, including costs related to the transfer of work to other existing facilities. Closure costs are recorded primarily within Cost of Sales in the accompanying Consolidated Statements of Income and are reflected in the results of the Industrial segment.

The following table sets forth the change in the liability for the 2017 employee termination actions:



January 1, 2017	$	—
Employee termination benefit costs	3,756
Payments	(3,008		)
Foreign currency translation	(45		)
September 30, 2017	$	703

The majority of this balance is expected to be paid in 2017.

Accounting Changes

In July 2015, the FASB amended its guidance related to the measurement of inventory. The amended guidance requires inventory to be measured at the lower of cost and net realizable value and thereby simplifies the current guidance of measuring inventory at the lower of cost or market. The amended guidance is effective prospectively for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The Company adopted the guidance during the first quarter of 2017 and it did not have a material impact on its Consolidated Financial Statements.

Inventories (Tables)

Schedule of Inventory

The components of inventories consisted of:



	September 30, 2017		December 31, 2016
Finished goods	$	78,116	$	71,100
Work-in-process	110,204		98,246
Raw material and supplies	64,182		58,413
	$	252,502	$	227,759

Goodwill and Other Intangible Assets (Tables)

Schedule of Goodwill

The following table sets forth the change in the carrying amount of goodwill for each reportable segment and for the Company as of and for the period ended September 30, 2017:



	Industrial		Aerospace		Total Company
January 1, 2017	$	602,650	$	30,786	$	633,436
Acquisition related	3,330		—		3,330
Foreign currency translation	49,224		—		49,224
September 30, 2017	$	655,204	$	30,786	$	685,990

Schedule of Finite-Lived Intangible Assets by Major Class

Other intangible assets consisted of:



		September 30, 2017						December 31, 2016
	Range of Life -Years	Gross Amount			Accumulated Amortization			Gross Amount			Accumulated Amortization
Amortized intangible assets:
Revenue sharing programs (RSPs)	Up to 30	$	293,700		$	(105,054	)	$	293,700		$	(95,701	)
Component repair programs (CRPs)	Up to 30	111,839			(15,112		)	111,839			(10,497		)
Customer lists/relationships	10-16	215,966			(62,250		)	215,266			(53,198		)
Patents and technology	4-14	87,052			(45,428		)	84,052			(37,897		)
Trademarks/trade names	10-30	11,950			(10,258		)	11,950			(9,967		)
Other	Up to 15	20,551			(16,960		)	20,551			(16,338		)
		741,058			(255,062		)	737,358			(223,598		)
Unamortized intangible assets:
Trade names		42,770			—			42,770			—
Foreign currency translation		(14,435		)	—			(34,272		)	—
Other intangible assets		$	769,393		$	(255,062	)	$	745,856		$	(223,598	)

Debt (Tables)

Schedule of Debt

Long-term debt and notes and overdrafts payable at September 30, 2017 and December 31, 2016 consisted of:



	September 30, 2017					December 31, 2016
	Carrying Amount			Fair Value		Carrying Amount			Fair Value
Revolving credit agreement	$	393,000		$	397,805	$	363,300		$	364,775
3.97% Senior Notes	100,000			103,319		100,000			101,598
Borrowings under lines of credit and overdrafts	16,875			16,875		30,825			30,825
Capital leases	4,882			5,314		5,413			5,902
Other foreign bank borrowings	1,236			1,249		1,416			1,428
	515,993			524,562		500,954			504,528
Less current maturities	(18,564		)			(32,892		)
Long-term debt	$	497,429				$	468,062

Derivatives (Tables)

Gain (Loss) Recorded in Other Expense (Income), Net in Consolidated Statements of Income

The following table sets forth the net (loss) gain recorded in other expense (income), net in the consolidated statements of income for the three- and nine-month periods ended September 30, 2017 and 2016 for non-designated derivatives held by the Company. Such amounts were substantially offset by the net (gain) loss recorded on the underlying hedged asset or liability, also recorded in other expense (income), net.



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Foreign exchange contracts	$	(2,545	)	$	(3,755	)	$	(12,949	)	$	(7,506	)

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)

The following table sets forth the gain (loss), net of tax, recorded in accumulated other comprehensive income (loss), net of tax, for the three- and nine-month periods ended September 30, 2017 and 2016 for derivatives held by the Company and designated as hedging instruments.



	Three months ended September 30,					Nine months ended September 30,
	2017		2016			2017			2016
Cash flow hedges:
Interest rate contracts	$	97	$	137		$	(167	)	$	74
Foreign exchange contracts	238		(287		)	43			(654		)
	$	335	$	(150	)	$	(124	)	$	(580	)

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table sets forth the fair value amounts of derivative instruments held by the Company.



	September 30, 2017					December 31, 2016
	Asset Derivatives		Liability Derivatives			Asset Derivatives		Liability Derivatives
Derivatives designated as hedging instruments:
Interest rate contracts	$	—	$	(345	)	$	—	$	(78	)
Foreign exchange contracts	—		(121		)	—		(177		)

Derivatives not designated as hedging instruments:
Foreign exchange contracts	65		(377		)	397		(1,499		)
Total derivatives	$	65	$	(843	)	$	397	$	(1,754	)

Fair Value Measurements (Tables)

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following table provides the financial assets and financial liabilities reported at fair value and measured on a recurring basis:



				Fair Value Measurements Using
Description	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
September 30, 2017
Asset derivatives	$	65		$	—	$	65		$	—
Liability derivatives	(843		)	—		(843		)	—
Bank acceptances	13,009			—		13,009			—
Rabbi trust assets	2,427			2,427		—			—
	$	14,658		$	2,427	$	12,231		$	—

December 31, 2016
Asset derivatives	$	397		$	—	$	397		$	—
Liability derivatives	(1,754		)	—		(1,754		)	—
Bank acceptances	9,690			—		9,690			—
Rabbi trust assets	2,216			2,216		—			—
	$	10,549		$	2,216	$	8,333		$	—

Pension and Other Postretirement Benefits (Tables)

Schedule of Net Benefit Costs

Pension and other postretirement benefits expenses consisted of the following:



	Three months ended September 30,						Nine months ended September 30,
Pensions	2017			2016			2017			2016
Service cost	$	1,572		$	1,354		$	4,674		$	4,056
Interest cost	4,764			4,869			14,051			14,650
Expected return on plan assets	(7,206		)	(7,564		)	(20,882		)	(22,774		)
Amortization of prior service cost	110			52			330			157
Amortization of actuarial losses	2,703			2,697			7,846			8,109
Curtailment gain	—			—			(7,217		)	—
Settlement loss (gain)	298			—			(193		)	—
Net periodic benefit cost	$	2,241		$	1,408		$	(1,391	)	$	4,198

In June 2017, the Company authorized the closure of its FOBOHA facility located in Muri, Switzerland which resulted in pension curtailment and settlement gains of $7,217 and $230, respectively, during the second quarter of 2017. See Note 14 of the Consolidated Financial Statements for additional information related to the Closure.

In May 2017, the Company contributed $5,000 of discretionary contributions to its U.S Qualified pension plans. The Company currently does not plan to make any additional discretionary contributions to its U.S. Qualified pension plans, however approximately $5,000 is expected to be made into its U.S. Non-qualified and international pension plans throughout 2017.



	Three months ended September 30,						Nine months ended September 30,
Other Postretirement Benefits	2017			2016			2017			2016
Service cost	$	20		$	31		$	62		$	92
Interest cost	389			440			1,170			1,324
Amortization of prior service credit	(17		)	(93		)	(51		)	(280		)
Amortization of actuarial losses	68			134			207			401
Net periodic benefit cost	$	460		$	512		$	1,388		$	1,537

Changes in Accumulated Other Comprehensive Income (Loss) by Component (Tables)

Schedule of Changes in Accumulated Other Comprehensive Income (Loss) By Component

The following table sets forth the changes in accumulated other comprehensive income (loss), net of tax, by component for the nine-month periods ended September 30, 2017 and 2016:



	Gains and Losses on Cash Flow Hedges			Pension and Other Postretirement Benefit Items			Foreign Currency Items			Total
January 1, 2017	$	(227	)	$	(114,570	)	$	(86,031	)	$	(200,828	)
Other comprehensive (loss) income before reclassifications to consolidated statements of income	(501		)	(1,888		)	80,174			77,785
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	377			5,464			—			5,841
Net current-period other comprehensive (loss) income	(124		)	3,576			80,174			83,626
September 30, 2017	$	(351	)	$	(110,994	)	$	(5,857	)	$	(117,202	)



	Gains and Losses on Cash Flow Hedges			Pension and Other Postretirement Benefit Items			Foreign Currency Items			Total
January 1, 2016	$	115		$	(105,703	)	$	(37,664	)	$	(143,252	)
Other comprehensive (loss) income before reclassifications to consolidated statements of income	(823		)	283			2,100			1,560
Amounts reclassified from accumulated other comprehensive income to the consolidated statements of income	243			5,457			—			5,700
Net current-period other comprehensive (loss) income	(580		)	5,740			2,100			7,260
September 30, 2016	$	(465	)	$	(99,963	)	$	(35,564	)	$	(135,992	)

Schedule of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Loss) to the Consolidated Statements of Income

The following table sets forth the reclassifications out of accumulated other comprehensive income (loss) by component for the three- and nine-month periods ended September 30, 2017 and 2016:



Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income
	Three months ended September 30, 2017			Three months ended September 30, 2016
Gains and losses on cash flow hedges
Interest rate contracts	$	(174	)	$	(137	)	Interest expense
Foreign exchange contracts	(40		)	(20		)	Net sales
	(214		)	(157		)	Total before tax
	74			55			Tax benefit
	(140		)	(102		)	Net of tax

Pension and other postretirement benefit items
Amortization of prior-service (costs) credits, net	$	(93	)	$	41		(A)
Amortization of actuarial losses	(2,771		)	(2,831		)	(A)
Settlement loss	(298		)	—			(A)
	(3,162		)	(2,790		)	Total before tax
	946			977			Tax benefit
	(2,216		)	(1,813		)	Net of tax

Total reclassifications in the period	$	(2,356	)	$	(1,915	)

(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic pension cost. See Note 9.



Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income
	Nine months ended September 30, 2017			Nine months ended September 30, 2016
Gains and losses on cash flow hedges
Interest rate contracts	$	(380	)	$	(437	)	Interest expense
Foreign exchange contracts	(178		)	40			Net sales
	(558		)	(397		)	Total before tax
	181			154			Tax benefit
	(377		)	(243		)	Net of tax

Pension and other postretirement benefit items
Amortization of prior-service (costs) credits, net	$	(279	)	$	123		(A)
Amortization of actuarial losses	(8,053		)	(8,510		)	(A)
Curtailment gain	187			—			(A)
Settlement loss	(68		)	—			(A)
	(8,213		)	(8,387		)	Total before tax
	2,749			2,930			Tax benefit
	(5,464		)	(5,457		)	Net of tax

Total reclassifications in the period	$	(5,841	)	$	(5,700	)

(A) These accumulated other comprehensive income (loss) components are included within the computation of net periodic pension cost. See Note 9.

Information on Business Segments (Tables)

Schedule of Segment Reporting Information, by Segment

The following tables set forth information about the Company's operations by its two reportable segments:



	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Net sales
Industrial	$	240,390		$	208,748		$	719,556		$	608,534
Aerospace	116,767			102,816			343,899			298,055
Intersegment sales	(1		)	(3		)	(4		)	(3		)
Total net sales	$	357,156		$	311,561		$	1,063,451		$	906,586

Operating profit
Industrial	$	29,308		$	34,958		$	100,154		$	99,445
Aerospace	18,478			16,859			60,519			41,359
Total operating profit	47,786			51,817			160,673			140,804
Interest expense	3,748			3,020			10,638			8,826
Other expense (income), net	357			621			773			24
Income before income taxes	$	43,681		$	48,176		$	149,262		$	131,954



	September 30, 2017		December 31, 2016
Assets
Industrial	$	1,502,193	$	1,356,081
Aerospace	648,561		647,766
Other ^(A)	195,777		133,692
Total assets	$	2,346,531	$	2,137,539

(A) "Other" assets include corporate-controlled assets, the majority of which are cash and deferred tax assets.

Business Reorganization (Tables)

Schedule of Liability for 2017 employee termination actions

The following table sets forth the change in the liability for the 2017 employee termination actions:



January 1, 2017	$	—
Employee termination benefit costs	3,756
Payments	(3,008		)
Foreign currency translation	(45		)
September 30, 2017	$	703

Acquisition (Details) (USD $)

In Thousands, unless otherwise specified

0 Months Ended

6 Months Ended

9 Months Ended

Sep. 30, 2017

Dec. 31, 2016

Apr. 3, 2017

Gammaflux L.P. [Member]

Sep. 30, 2017

Gammaflux L.P. [Member]

Sep. 30, 2017

Gammaflux L.P. [Member]

Apr. 3, 2017

Gammaflux L.P. [Member]

Business Acquisition [Line Items]

Purchase price

$ 8,866

Cash acquired

2

Goodwill acquired

685,990

633,436

1,535

Intangible assets acquired

3,700

Acquisition-related costs

184

Net sales

$ 6,483

Net Income Per Common Share (Details)

3 Months Ended

9 Months Ended

1 Months Ended

9 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Feb. 28, 2017

Stock Options [Member]

Feb. 28, 2017

Restricted Stock Units (RSUs) [Member]

Feb. 28, 2017

Performance Share Awards [Member]

Sep. 30, 2017

Performance Share Awards [Member]

Net Income Per Common Share [Line Items]

Weighted average number of diluted shares outstanding adjustment (in shares)

504,168

366,251

509,172

436,941

Antidilutive securities excluded from computation of EPS (in shares)

0

209,907

59,261

346,468

Options, granted (in shares)

125,300

Other than options, granted (in shares)

85,307

83,970

Performance period

3 years

Minimum range of target award of stock plan

0.00%

Maximum range of target award of stock plan

250.00%

Inventories (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Inventory Disclosure [Abstract]

Finished goods

$ 78,116

$ 71,100

Work-in-process

110,204

98,246

Raw material and supplies

64,182

58,413

Inventories

$ 252,502

$ 227,759

Goodwill and Other Intangible Assets (Details) (USD $)

6 Months Ended

9 Months Ended

Jun. 30, 2017

Sep. 30, 2017

Dec. 31, 2016

Goodwill:

Goodwill, beginning of period

$ 633,436,000

Acquisition related

3,330,000

Foreign currency translation

49,224,000

Goodwill, end of period

685,990,000

Goodwill impairment

0

Other Intangible Assets:

Gross Amount

741,058,000

737,358,000

Accumulated Amortization

(255,062,000)

(223,598,000)

Foreign currency translation

(14,435,000)

(34,272,000)

Other intangible assets

769,393,000

745,856,000

Intangible Assets, Future Amortization Expense

Amortization of intangible assets expected in 2017

41,000,000

Amortization of intangible assets expected in 2018

41,000,000

Amortization of intangible assets expected in 2019

40,000,000

Amortization of intangible assets expected in 2020

37,000,000

Amortization of intangible assets expected in 2021

36,000,000

Impairment of indefinite-lived intangible assets

0

Trade name [Member]

Other Intangible Assets:

Unamortized intangible asset

42,770,000

Revenue sharing programs (RSPs) [Member]

Other Intangible Assets:

Gross Amount

293,700,000

Accumulated Amortization

(105,054,000)

(95,701,000)

Component repair programs (CRPs) [Member]

Other Intangible Assets:

Gross Amount

111,839,000

Accumulated Amortization

(15,112,000)

(10,497,000)

Customer lists/relationships [Member]

Other Intangible Assets:

Gross Amount

215,966,000

215,266,000

Accumulated Amortization

(62,250,000)

(53,198,000)

Patents and technology [Member]

Other Intangible Assets:

Gross Amount

87,052,000

84,052,000

Accumulated Amortization

(45,428,000)

(37,897,000)

Trademarks/trade names [Member]

Other Intangible Assets:

Gross Amount

11,950,000

Accumulated Amortization

(10,258,000)

(9,967,000)

Other [Member]

Other Intangible Assets:

Gross Amount

20,551,000

Accumulated Amortization

(16,960,000)

(16,338,000)

Industrial [Member]

Goodwill:

Goodwill, beginning of period

602,650,000

Acquisition related

3,330,000

Foreign currency translation

49,224,000

Goodwill, end of period

655,204,000

Aerospace [Member]

Goodwill:

Goodwill, beginning of period

30,786,000

Acquisition related

0

Foreign currency translation

0

Goodwill, end of period

$ 30,786,000

Minimum [Member] |
Customer lists/relationships [Member]

Other Intangible Assets:

Range of life

10 years

Minimum [Member] |
Patents and technology [Member]

Other Intangible Assets:

Range of life

4 years

Minimum [Member] |
Trademarks/trade names [Member]

Other Intangible Assets:

Range of life

10 years

Maximum [Member] |
Revenue sharing programs (RSPs) [Member]

Other Intangible Assets:

Range of life

30 years

Maximum [Member] |
Component repair programs (CRPs) [Member]

Other Intangible Assets:

Range of life

30 years

Maximum [Member] |
Customer lists/relationships [Member]

Other Intangible Assets:

Range of life

16 years

Maximum [Member] |
Patents and technology [Member]

Other Intangible Assets:

Range of life

14 years

Maximum [Member] |
Trademarks/trade names [Member]

Other Intangible Assets:

Range of life

30 years

Maximum [Member] |
Other [Member]

Other Intangible Assets:

Range of life

15 years

Debt (Debt Schedule) (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Debt Instrument [Line Items]

Fair value of debt

$ 524,562

$ 504,528

Total debt, net of unamortized discounts

515,993

500,954

Borrowings under lines of credit and overdrafts

16,875

30,825

Less current maturities

(18,564)

(32,892)

Long-term debt

497,429

468,062

Revolving Credit Agreement [Member]

Debt Instrument [Line Items]

Carrying amount of debt

393,000

363,300

Fair value of debt

397,805

364,775

Senior Notes [Member] |
3.97% Senior Notes [Member]

Debt Instrument [Line Items]

Carrying amount of debt

100,000

Fair value of debt

103,319

101,598

Lines of Credit and Overdrafts [Member]

Debt Instrument [Line Items]

Fair value of debt

16,875

30,825

Borrowings under lines of credit and overdrafts

16,875

30,825

Capital Lease Obligations [Member]

Debt Instrument [Line Items]

Carrying amount of debt

4,882

5,413

Fair value of debt

5,314

5,902

Foreign Bank Borrowings [Member]

Debt Instrument [Line Items]

Carrying amount of debt

1,236

1,416

Fair value of debt

$ 1,249

$ 1,428

Debt (Narrative) (Details) (USD $)

9 Months Ended

1 Months Ended

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2017

Revolving Credit Agreement [Member]

Dec. 31, 2016

Revolving Credit Agreement [Member]

Sep. 30, 2017

Revolving Credit Agreement [Member]

Euro Member Countries, Euro

Dec. 31, 2016

Revolving Credit Agreement [Member]

Euro Member Countries, Euro

Sep. 30, 2017

Senior Notes [Member]

3.97% Senior Notes [Member]

Dec. 31, 2016

Senior Notes [Member]

3.97% Senior Notes [Member]

Oct. 31, 2014

Senior Notes [Member]

3.97% Senior Notes [Member]

Sep. 30, 2017

Lines of Credit [Member]

Dec. 31, 2016

Lines of Credit [Member]

Sep. 30, 2017

Bank Overdrafts [Member]

Dec. 31, 2016

Bank Overdrafts [Member]

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

United Kingdom, Pounds

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

Euro Member Countries, Euro

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

Switzerland, Francs

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

one-month LIBOR [Member]

Minimum [Member]

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

one-month LIBOR [Member]

Maximum [Member]

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

Base Rate [Member]

Minimum [Member]

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022 [Member]

Base Rate [Member]

Maximum [Member]

Feb. 28, 2017

Revolving Credit Agreement [Member]

Fourth Amendment, Maturity February 2022, Accordion Feature [Member]

Debt Instrument [Line Items]

Carrying amount of debt

$ 393,000,000

$ 363,300,000

$ 100,000,000

Borrowings under lines of credit and overdrafts

16,875,000

30,825,000

16,800,000

30,700,000

75,000

125,000

Stated interest rate

2.34%

1.86%

3.97%

Converted amount with accrued interest

100,000,000

Percent allowed to be prepaid

100.00%

Line of credit facility, maximum borrowing capacity

750,000,000

59,000,000

850,000,000

600,000,000

350,000,000

Line of credit facility with accordian feature, maximum borrowing capacity

250,000,000

Variable basis spread

1.10%

1.70%

0.10%

0.70%

Debt fees and expenses

2,542,000

Remaining borrowing capacity

$ 457,000,000

$ 386,700,000

Debt covenant ratio of senior debt to EBITDA

3.25

Debt covenant ratio of total debt to EBITDA

3.75

Debt covenant ratio of EBITDA to cash interest expense

4.25

Line of credit, interest rate at period end

2.05%

1.96%

Repayment period

2 days

Derivatives (Details) (USD $)

In Thousands, unless otherwise specified

Sep. 30, 2017

Dec. 31, 2016

Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]

Derivative Assets

$ 65

$ 397

Derivative Liabilities

(843)

(1,754)

Designated as Hedging Instrument [Member] |
Interest Rate Contract [Member]

Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]

Derivative Assets

0

Derivative Liabilities

(345)

(78)

Designated as Hedging Instrument [Member] |
Foreign Exchange Contract [Member]

Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]

Derivative Assets

0

Derivative Liabilities

(121)

(177)

Not Designated as Hedging Instrument [Member] |
Foreign Exchange Contract [Member]

Derivative Assets (Liabilities), at Fair Value, Net, by Balance Sheet Classification [Abstract]

Derivative Assets

65

397

Derivative Liabilities

$ (377)

$ (1,499)

Derivatives (Details 1) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Foreign Exchange Contract [Member]

Sep. 30, 2016

Foreign Exchange Contract [Member]

Sep. 30, 2017

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Sep. 30, 2016

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Sep. 30, 2017

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Sep. 30, 2016

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Sep. 30, 2017

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Interest Rate Contract [Member]

Sep. 30, 2016

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Interest Rate Contract [Member]

Sep. 30, 2017

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Interest Rate Contract [Member]

Sep. 30, 2016

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Interest Rate Contract [Member]

Sep. 30, 2017

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2016

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2017

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2016

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2017

Not Designated as Hedging Instrument [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2016

Not Designated as Hedging Instrument [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2017

Not Designated as Hedging Instrument [Member]

Foreign Exchange Contract [Member]

Sep. 30, 2016

Not Designated as Hedging Instrument [Member]

Foreign Exchange Contract [Member]

Dec. 31, 2012

Interest Rate Swap [Member]

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Bank

Sep. 30, 2017

Interest Rate Swap [Member]

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Apr. 28, 2017

Interest Rate Swap [Member]

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

Bank

Apr. 28, 2017

Interest Rate Swap [Member]

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

one-month LIBOR [Member]

Dec. 31, 2012

Interest Rate Swap [Member]

Designated as Hedging Instrument [Member]

Cash Flow Hedging [Member]

one-month LIBOR [Member]

Derivative [Line Items]

Term of interest rate derivatives

5 years

Number of banks transacted with for interest rate swap agreements (in banks)

3

1

Derivative amount of hedge

$ 100,000

Fixed interest rate

1.03%

1.92%

Maximum remaining maturity of foreign currency derivatives

2 years

Derivative, Net Hedge Ineffectiveness Gain (Loss)

0

Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net

335

(150)

(124)

(580)

97

137

(167)

74

238

(287)

43

(654)

Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net

(2,545)

(3,755)

(12,949)

(7,506)

Net cash losses from settlement

$ (17,773)

$ 3,406

$ 14,962

$ 3,822

Fair Value Measurements (Details) (USD $)

In Thousands, unless otherwise specified

9 Months Ended

Sep. 30, 2017

Dec. 31, 2016

Sep. 30, 2017

Quoted Prices in Active Markets for Identical Assets (Level 1)

Dec. 31, 2016

Quoted Prices in Active Markets for Identical Assets (Level 1)

Sep. 30, 2017

Significant Other Observable Inputs (Level 2)

Dec. 31, 2016

Significant Other Observable Inputs (Level 2)

Sep. 30, 2017

Significant Unobservable Inputs (Level 3)

Dec. 31, 2016

Significant Unobservable Inputs (Level 3)

Sep. 30, 2017

Estimate of Fair Value, Fair Value Disclosure [Member]

Dec. 31, 2016

Estimate of Fair Value, Fair Value Disclosure [Member]

Sep. 30, 2017

Minimum [Member]

Sep. 30, 2017

Maximum [Member]

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Asset derivatives

$ 65

$ 397

$ 0

$ 65

$ 397

$ 0

$ 65

$ 397

Liability derivatives

(843)

(1,754)

0

(843)

(1,754)

0

(843)

(1,754)

Bank acceptances

0

13,009

9,690

0

13,009

9,690

Rabbi trust assets

2,427

2,216

0

2,427

2,216

Financial assets and financial liabilities, reported at fair value

$ 2,427

$ 2,216

$ 12,231

$ 8,333

$ 0

$ 14,658

$ 10,549

Maturity of bank acceptances

3 months

6 months

Pension and Other Postretirement Benefits (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2017

Jun. 30, 2017

Sep. 30, 2016

Sep. 30, 2017

Sep. 30, 2016

Pensions [Member]

Pension and other postretirement benefits expenses

Service cost

$ 1,572

$ 1,354

$ 4,674

$ 4,056

Interest cost

4,764

4,869

14,051

14,650

Expected return on plan assets

(7,206)

(7,564)

(20,882)

(22,774)

Amortization of prior service cost (credit)

110

52

330

157

Amortization of actuarial losses

2,703

2,697

7,846

8,109

Curtailment gain

0

(7,217)

0

Settlement loss (gain)

298

(230)

0

(193)

0

Net periodic benefit cost

2,241

1,408

(1,391)

4,198

Pensions [Member] |
Domestic Plan [Member] |
Qualified Plan [Member]

Pension and other postretirement benefits expenses

Discretionary contributions

5,000

Pensions [Member] |
Domestic Plan [Member] |
Nonqualified Plan [Member]

Pension and other postretirement benefits expenses

Expected company contributions in 2017

5,000