OSHKOSH CORP, 10-K filed on 11/20/2018
Annual Report
v3.10.0.1
Document and Entity Information - USD ($)
12 Months Ended
Sep. 30, 2018
Nov. 13, 2018
Mar. 31, 2018
Document and Entity Information [Abstract]      
Entity Registrant Name OSHKOSH CORP    
Entity Central Index Key 0000775158    
Current Fiscal Year End Date --09-30    
Entity Filer Category Large Accelerated Filer    
Document Type 10-K    
Document Period End Date Sep. 30, 2018    
Document Fiscal Year Focus 2018    
Document Fiscal Period Focus FY    
Amendment Flag false    
Entity Common Stock, Shares Outstanding (in shares)   71,894,110  
Entity Well-known Seasoned Issuer Yes    
Entity Voluntary Filers No    
Entity Current Reporting Status Yes    
Entity Public Float     $ 5,711,502,765
Entity Small Business false    
Entity Shell Company false    
Entity Emerging Growth Company false    
v3.10.0.1
CONSOLIDATED STATEMENTS OF INCOME - USD ($)
$ in Millions
12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2016
Income Statement [Abstract]      
Net sales $ 7,705.5 $ 6,829.6 $ 6,279.2
Cost of sales 6,349.8 5,655.2 5,223.4
Gross income 1,355.7 1,174.4 1,055.8
Operating expenses:      
Selling, general and administrative 663.9 665.6 612.4
Amortization of purchased intangibles 38.3 45.8 52.5
Asset impairment charge 0.0 0.0 26.9
Total operating expenses 702.2 711.4 691.8
Operating income 653.5 463.0 364.0
Other income (expense):      
Interest expense (70.9) (59.8) (60.4)
Interest income 15.3 4.9 2.1
Miscellaneous, net (3.3) 3.2 1.3
Income before income taxes and earnings of unconsolidated affiliates 594.6 411.3 307.0
Provision for income taxes 123.8 127.2 92.4
Income before earnings of unconsolidated affiliates 470.8 284.1 214.6
Equity in earnings of unconsolidated affiliates 1.1 1.5 1.8
Net income $ 471.9 $ 285.6 $ 216.4
Earnings per share:      
Total earnings (loss) per share-basic (in dollars per share) $ 6.38 $ 3.82 $ 2.94
Total earnings (loss) per share -diluted (in dollars per share) $ 6.29 $ 3.77 $ 2.91
v3.10.0.1
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Statement - USD ($)
$ in Millions
12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2016
Statement of Comprehensive Income [Abstract]      
Net income $ 471.9 $ 285.6 $ 216.4
Other comprehensive income (loss), net of tax:      
Employee pension and postretirement benefits 35.3 27.7 (27.5)
Currency translation adjustments (17.6) 22.5 (3.0)
Change in fair value of derivative instruments 0.5 (0.2) (0.1)
Total other comprehensive income (loss), net of tax 18.2 50.0 (30.6)
Comprehensive income $ 490.1 $ 335.6 $ 185.8
v3.10.0.1
CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Sep. 30, 2018
Sep. 30, 2017
Current assets:    
Cash and cash equivalents $ 454.6 $ 447.0
Receivables, net 1,521.6 1,306.3
Inventories, net 1,227.7 1,198.4
Other current assets 66.0 88.1
Total current assets 3,269.9 3,039.8
Property, plant and equipment, net 481.1 469.9
Goodwill 1,007.9 1,013.0
Purchased intangible assets, net 469.4 507.8
Other long-term assets 65.9 68.4
Total assets 5,294.2 5,098.9
Current liabilities:    
Revolving credit facility and current maturities of long-term debt 0.0 23.0
Accounts payable 776.9 651.0
Customer advances 444.9 513.4
Payroll-related obligations 192.5 191.8
Other current liabilities 275.8 303.9
Total current liabilities 1,690.1 1,683.1
Long-term debt, less current maturities 818.0 807.9
Other long-term liabilities 272.6 300.5
Commitments and contingencies
Shareholders’ equity:    
Preferred Stock ($.01 par value; 2,000,000 shares authorized; none issued and outstanding) 0.0 0.0
Common Stock ($.01 par value; 300,000,000 shares authorized; 75,101,465 and 92,101,465 shares issued, respectively) 0.7 0.9
Additional paid-in capital 814.8 802.2
Retained earnings 2,007.9 2,399.8
Accumulated other comprehensive loss (106.8) (125.0)
Common Stock in treasury, at cost (2,730,707 and 17,088,224 shares, respectively) (203.1) (770.5)
Total shareholders’ equity 2,513.5 2,307.4
Total liabilities and shareholders’ equity $ 5,294.2 $ 5,098.9
v3.10.0.1
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Sep. 30, 2018
Sep. 30, 2017
Stockholders' Equity, Number of Shares, Par Value and Other Disclosures [Abstract]    
Preferred Stock, par value (in dollars per share) $ 0.01 $ 0.01
Preferred Stock, shares authorized 2,000,000 2,000,000
Preferred Stock, shares issued 0 0
Preferred Stock, shares outstanding 0 0
Common Stock, par value (in dollars per share) $ 0.01 $ 0.01
Common Stock, shares authorized 300,000,000 300,000,000
Common Stock, shares issued 75,101,465 92,101,465
Common Stock in treasury, shares 2,730,707 17,088,224
v3.10.0.1
CONSOLIDATED STATEMENTS OF EQUITY - USD ($)
$ in Millions
Total
Common stocks
Additional Paid-In Capital
Retained Earnings
Accumulated Other Comprehensive Income (Loss)
Common Stock in Treasury at Cost
Balance at Sep. 30, 2015 $ 1,911.1 $ 0.9 $ 771.5 $ 2,016.5 $ (144.4) $ (733.4)
Changes in Equity            
Net income 216.4     216.4    
Employee pension and postretirement benefits (27.5)       (27.5)  
Currency translation adjustments (3.0)       (3.0)  
Cash dividends (55.9)     (55.9)    
Repurchase of common stock (100.1)         (100.1)
Exercise of stock options 21.7   0.5     21.2
Stock-based compensation expense 18.7   18.7      
Excess tax benefit from stock-based compensation 1.1   1.1      
Payment of stock-based restricted and performance shares 0.0   (9.0)     9.0
Shares tendered for taxes on stock-based compensation (6.2)         (6.2)
Other 0.2   (0.5)   (0.1) 0.8
Balance at Sep. 30, 2016 1,976.5 0.9 782.3 2,177.0 (175.0) (808.7)
Changes in Equity            
Net income 285.6     285.6    
Employee pension and postretirement benefits 27.7       27.7  
Currency translation adjustments 22.5       22.5  
Cash dividends (62.8)     (62.8)    
Exercise of stock options 39.9   4.3     35.6
Stock-based compensation expense 22.4   22.4      
Payment of stock-based restricted and performance shares 0.0   (7.0)     7.0
Shares tendered for taxes on stock-based compensation (4.8)         (4.8)
Other 0.4   0.2   (0.2) 0.4
Balance at Sep. 30, 2017 2,307.4 0.9 802.2 2,399.8 (125.0) (770.5)
Changes in Equity            
Net income 471.9     471.9    
Employee pension and postretirement benefits 35.3       35.3  
Currency translation adjustments (17.6)       (17.6)  
Cash dividends (71.2)     (71.2)    
Repurchase of common stock (249.3)         (249.3)
Exercise of stock options 16.6   (5.1)     21.7
Stock-based compensation expense 26.7   26.7      
Payment of stock-based restricted and performance shares 0.0   (9.4)     9.4
Shares tendered for taxes on stock-based compensation (7.7)         (7.7)
Treasury Stock, Retired, Cost Method, Amount 0.0 (0.2)   (792.6)   792.8
Other 1.4   0.4   0.5 0.5
Balance at Sep. 30, 2018 $ 2,513.5 $ 0.7 $ 814.8 $ 2,007.9 $ (106.8) $ (203.1)
v3.10.0.1
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - USD ($)
$ in Millions
12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2016
Statement of Stockholders' Equity [Abstract]      
Employee pension and postretirement benefits, tax $ 10.6 $ 15.2 $ (14.2)
Common Stock, Dividends, Per Share, Cash Paid $ 0.96 $ 0.84 $ 0.76
v3.10.0.1
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2016
Operating activities:      
Net income $ 471.9 $ 285.6 $ 216.4
Asset impairment charge 0.0 0.0 26.9
Depreciation and amortization 120.5 130.3 128.8
Stock-based compensation expense 26.7 22.4 18.7
Deferred income taxes (3.1) 7.8 (17.0)
Loss (gain) on sale of assets 1.1 (6.6) (19.1)
Foreign Currency Transaction (Gains) Losses, Unrealized 1.4 1.6 (1.1)
Debt extinguishment 10.3 0.0 0.0
Other non-cash adjustments 2.3 0.1 0.3
Changes in operating assets and liabilities:      
Receivables, net (227.0) (295.9) (39.6)
Inventories, net (38.6) (202.3) 327.2
Other current assets 11.2 14.6 (19.0)
Accounts payable 124.3 177.2 (87.6)
Customer advances (68.4) 41.5 31.6
Payroll-related obligations 1.7 43.5 31.2
Income taxes 26.2 (14.8) (14.0)
Other current liabilities (33.9) 43.7 10.8
Other long-term assets and liabilities 9.7 (2.2) (10.6)
Total changes in operating assets and liabilities (194.8) (194.7) 230.0
Net cash provided by operating activities 436.3 246.5 583.9
Investing activities:      
Additions to property, plant and equipment (95.3) (85.8) (92.5)
Additions to equipment held for rental (4.8) (27.4) (34.8)
Proceeds from sale of property, plant and equipment 5.7 0.8 0.1
Proceeds from sale of equipment held for rental 5.8 49.5 40.2
Other investing activities (1.8) (2.3) (2.2)
Net cash used by investing activities (90.4) (65.2) (89.2)
Financing activities:      
Net decrease in short-term debt 0.0 0.0 (33.5)
Proceeds from issuance of debt (original maturities greater than three months) 639.4 5.9 323.5
Repayments of debt (original maturities greater than three months) (653.8) (23.0) (373.5)
Debt issuance costs (12.9) 0.0 0.0
Repurchases of Common Stock (257.0) (4.8) (106.3)
Dividends paid (71.2) (62.8) (55.9)
Proceeds from exercise of stock options 16.6 39.9 21.7
Excess tax benefit from stock-based compensation 0.0 0.0 2.0
Net cash used by financing activities (338.9) (44.8) (222.0)
Effect of exchange rate changes on cash 0.6 (11.4) 6.3
Increase in cash and cash equivalents 7.6 125.1 279.0
Cash and cash equivalents at beginning of year 447.0 321.9 42.9
Cash and cash equivalents at end of year 454.6 447.0 321.9
Supplemental disclosures:      
Cash paid for interest 55.7 57.1 54.7
Cash paid for income taxes $ 100.3 $ 129.9 $ 116.8
v3.10.0.1
Nature of Operations
12 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Operations
Nature of Operations

Oshkosh Corporation and its subsidiaries (the “Company”) are leading designers and manufacturers of a wide variety of specialty vehicles and vehicle bodies for the Americas and global markets. “Oshkosh” refers to Oshkosh Corporation, not including its subsidiaries. The Company sells its products into four principal vehicle markets — access equipment, defense, fire & emergency and commercial. The access equipment business is conducted through its wholly-owned subsidiary, JLG Industries, Inc. and its wholly-owned subsidiaries (JLG) and JerrDan Corporation (JerrDan). The Company’s defense business is conducted principally through its wholly-owned subsidiary, Oshkosh Defense, LLC and its wholly-owned subsidiary (Oshkosh Defense). The Company’s fire & emergency business is principally conducted through its wholly-owned subsidiaries Pierce Manufacturing Inc. (Pierce), Oshkosh Airport Products, LLC (Airport Products) and Kewaunee Fabrications, LLC (Kewaunee). The Company’s commercial business is principally conducted through its wholly-owned subsidiaries, McNeilus Companies, Inc. (McNeilus), Concrete Equipment Company, Inc. and its wholly-owned subsidiary (CON-E-CO), London Machinery Inc. and its wholly-owned subsidiary (London), Iowa Mold Tooling Co., Inc. (IMT) and Oshkosh Commercial Products, LLC (Oshkosh Commercial).
v3.10.0.1
Summary of Significant Accounting Policies
12 Months Ended
Sep. 30, 2018
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Principles of Consolidation and Presentation — The consolidated financial statements include the accounts of Oshkosh and all of its majority-owned or controlled subsidiaries and are prepared in conformity with generally accepted accounting principles in the United States of America (U.S. GAAP). All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition — Through September 30, 2018, the Company recognized revenue on equipment and parts sales when contract terms were met, collectability was reasonably assured and a product was shipped or risk of ownership had been transferred to and accepted by the customer. Revenue from service agreements was recognized as earned, when services had been rendered. Appropriate provisions were made for discounts, returns and sales allowances. Sales were recorded net of amounts invoiced for taxes imposed on the customer such as excise or value-added taxes.

Sales to the U.S. government of non-commercial products manufactured to the government’s specifications are recognized under percentage-of-completion accounting using either the units-of-delivery method or cost-to-cost method to measure contract performance. Under the units-of-delivery method, the Company records sales as units are accepted by the U.S. Department of Defense (DoD), generally based on unit sales values stated in the respective contracts. Costs of sales are based on actual costs incurred to produce the units delivered under the contract. Under the cost-to-cost method, sales and estimated margins are recognized as contract costs are incurred. The measurement method selected is generally determined based on the nature of the contract. The Company includes amounts representing contract change orders, claims or other items in sales only when they can be reliably estimated and realization is probable. Bid and proposal costs are expensed as incurred. The Company has significant experience in contracting and producing vehicles for the defense industry, which has resulted in a history of making reasonable estimates of revenues and costs when measuring progress toward contract completion. The Company charges anticipated losses on contracts or programs in progress to earnings when identified. Approximately 21%, 16% and 19% of the Company’s revenues were recognized under the percentage-of-completion accounting method in fiscal 2018, 2017 and 2016, respectively.

The Company invoices the government as the units are formally accepted. Deferred revenue arises from amounts received in advance of the culmination of the earnings process and is recognized as revenue in future periods when the applicable revenue recognition criteria have been met.

In fiscal 2018, changes in estimates on contracts accounted for under the cost-to-cost method on prior year revenues increased defense segment operating income by $2.2 million, net income by $1.7 million and earnings per share by $0.02. In fiscal 2017, changes in estimates on contracts accounted for under the cost-to-cost method on prior year revenues increased defense segment operating income by $6.3 million, net income by $3.9 million and earnings per share by $0.05. In fiscal 2016, changes in estimates on contracts accounted for under the cost-to-cost method on prior year revenues did not have a material impact on the defense segment operating income, net income and earnings per share.

Shipping and Handling Fees and Costs — Revenue received from shipping and handling fees is reflected in net sales. Shipping and handling fee revenue was not significant for any period presented. Shipping and handling costs are included in cost of sales.

Warranty — Provisions for estimated warranty and other related costs are recorded in cost of sales at the time of sale and are periodically adjusted to reflect actual experience. The amount of warranty liability accrued reflects management’s best estimate of the expected future cost of honoring Company obligations under the warranty plans. Historically, the cost of fulfilling the Company’s warranty obligations has principally involved replacement parts, labor and sometimes travel for any field retrofit campaigns. The Company’s estimates are based on historical experience, the extent of pre-production testing, the number of units involved and the extent of features/components included in product models. Also, each quarter, the Company reviews actual warranty claims experience to determine if there are systemic defects that would require a field campaign. The Company recognizes the revenue from sales of extended warranties over the life of the contracts.

Research and Development and Similar Costs — Except for customer sponsored research and development costs incurred pursuant to contracts (generally with the DoD), research and development costs are expensed as incurred and included in cost of sales. Research and development costs charged to expense amounted to $99.3 million, $98.0 million and $103.1 million during fiscal 2018, 2017 and 2016, respectively. Customer sponsored research and development costs incurred pursuant to contracts are accounted for as contract costs.

Advertising — Advertising costs are included in selling, general and administrative expense and are expensed as incurred. These expenses totaled $21.1 million, $23.0 million and $21.6 million in fiscal 2018, 2017 and 2016, respectively.

Stock-Based Compensation — The Company recognizes stock-based compensation using the fair value provisions prescribed by Accounting Standards Codification (ASC) Topic 718, Compensation — Stock Compensation. Accordingly, compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of grant and are recognized as expense over the vesting period of the share-based instrument, net of estimated forfeitures. See Note 15 of the Notes to Consolidated Financial Statements for information regarding the Company’s stock-based incentive plans.

Debt Financing Costs — Debt issuance costs on term debt are amortized using the interest method over the term of the debt. Deferred financing costs on lines of credit are amortized on a straight-line basis over the term of the related lines of credit. Amortization expense was $5.6 million (including $3.2 million of amortization related to early debt retirement), $3.0 million and $3.0 million in fiscal 2018, 2017 and 2016, respectively.

Income Taxes — Deferred income taxes are provided to recognize temporary differences between the financial reporting basis and the income tax basis of the Company’s assets and liabilities using currently enacted tax rates and laws. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

The Company evaluates uncertain income tax positions in a two-step process. The first step is recognition, where the Company evaluates whether an individual tax position has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have a less than 50% likelihood of being sustained, zero tax benefit is recorded. For tax positions that have met the recognition threshold in the first step, the Company performs the second step of measuring the benefit to be recorded. The actual benefits ultimately realized may differ from the Company’s estimates. In future periods, changes in facts and circumstances and new information may require the Company to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in results of operations and financial position in the period in which such changes occur.

Fair Value of Financial Instruments — Based on Company estimates, the carrying amounts of cash equivalents, receivables, accounts payable and accrued liabilities approximated fair value as of September 30, 2018 and 2017. See Notes 9, 14 and 17 of the Notes to Consolidated Financial Statements for additional fair value information.

Cash and Cash Equivalents — The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents at September 30, 2018 consisted principally of bank deposits and money market instruments.

Receivables — Receivables consist of amounts billed and currently due from customers and unbilled costs and accrued profits related to revenues on long-term contracts with the U.S. government that have been recognized for accounting purposes but not yet billed to customers. The Company extends credit to customers in the normal course of business and maintains an allowance for estimated losses resulting from the inability or unwillingness of customers to make required payments. The accrual for estimated losses is based on the Company’s historical experience, existing economic conditions and any specific customer collection issues the Company has identified. Account balances are charged against the allowance when the Company determines it is probable the receivable will not be recovered.

Concentration of Credit Risk — Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash equivalents, trade accounts receivable and guarantees of certain customers’ obligations under deferred payment contracts and lease purchase agreements.

The Company maintains cash and cash equivalents, and other financial instruments, with various major financial institutions. The Company performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any institution.

Concentration of credit risk with respect to trade accounts and lease receivables is limited due to the large number of customers and their dispersion across many geographic areas. However, a significant amount of trade and lease receivables are with the U.S. government, with rental companies globally, with companies in the ready-mix concrete industry, with municipalities and with several large waste haulers in the United States. The Company continues to monitor credit risk associated with its trade receivables.

Inventories — Inventories are stated at the lower of cost or market. Cost has been determined using the last-in, first-out (LIFO) method for 82% of the Company’s inventories at both September 30, 2018 and 2017. For the remaining inventories, cost has been determined using the first-in, first-out (FIFO) method.

Property, Plant and Equipment — Property, plant and equipment are recorded at cost. Depreciation expense is recognized over the estimated useful lives of the respective assets using accelerated and straight-line methods. The estimated useful lives range from ten to forty years for buildings and improvements, from four to twenty-five years for machinery and equipment and from three to ten years for software and related costs. The Company capitalizes interest on borrowings during the active construction period of major capital projects. All capitalized interest has been added to the cost of the underlying assets and is amortized over the useful lives of the assets.

Goodwill — Goodwill reflects the cost of an acquisition in excess of the aggregate fair value assigned to identifiable net assets acquired. Goodwill is not amortized; however, it is assessed for impairment at least annually and as triggering events or “indicators of potential impairment” occur. The Company performs its annual impairment test as of July 1 of each fiscal year. The Company evaluates the recoverability of goodwill by estimating the fair value of the businesses to which the goodwill relates. Estimated cash flows and related goodwill are grouped at the reporting unit level. A reporting unit is an operating segment or, under certain circumstances, a component of an operating segment. When the fair value of the reporting unit is less than the carrying value of the reporting unit, a further analysis is performed to measure and recognize the amount of the impairment loss, if any. Impairment losses, limited to the carrying value of goodwill, represent the excess of the carrying amount of a reporting unit’s goodwill over the implied fair value of that goodwill.

In evaluating the recoverability of goodwill, it is necessary to estimate the fair value of the reporting units. The Company evaluates the recoverability of goodwill utilizing the income approach and the market approach. The Company weighted the income approach more heavily (75%) as the Company believes the income approach more accurately considers long-term fluctuations in the U.S. and European construction markets than the market approach. Under the income approach, the Company determines fair value based on estimated future cash flows discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. Estimated future cash flows are based on the Company’s internal projection models, industry projections and other assumptions deemed reasonable by management. Rates used to discount estimated cash flows correspond to the Company’s cost of capital, adjusted for risk where appropriate, and are dependent upon interest rates at a point in time. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill impairment. Under the market approach, the Company derives the fair value of its reporting units based on revenue and earnings multiples of comparable publicly-traded companies. It is possible that assumptions underlying the impairment analysis will change in such a manner that impairment in value may occur in the future.

Impairment of Long-Lived Assets — Property, plant and equipment and amortizable intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If the sum of the expected undiscounted cash flows is less than the carrying value of the related asset or group of assets, a loss is recognized for the difference between the fair value and carrying value of the asset or group of assets.

Non-amortizable trade names are assessed for impairment at least annually and as triggering events or “indicators of potential impairment” occur. The Company performs its annual impairment test in the fourth quarter of its fiscal year. The Company evaluates the potential impairment by estimating the fair value of the non-amortizing intangible assets using the “relief from royalty” method. When the fair value of the non-amortizable trade name is less than the carrying value of the trade name, a further analysis is performed to measure and recognize the amount of the impairment loss, if any. Impairment losses, limited to the carrying value of the non-amortizable trade name, represent the excess of the carrying amount over the implied fair value of that non-amortizable trade name.

Customer Advances — Customer advances include amounts received in advance of the completion of fire & emergency and commercial vehicles. Most of these advances bear interest at fixed rates that approximate the prime rate at the time of the advance. Advances also include any performance-based payments received from the DoD in excess of the value of related inventory.

Other Long-Term Liabilities — Other long-term liabilities are comprised principally of the portions of the Company’s pension liability, other post-employment benefit liability, tax liability, accrued warranty and accrued product liability that are not expected to be settled in the subsequent twelve month period.

Foreign Currency Translation — All balance sheet accounts have been translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Income statement amounts have been translated using the average exchange rate during the period in which the transactions occurred. Resulting translation adjustments are included in “Accumulated other comprehensive income (loss).” Foreign currency transaction gains or losses are included in “Miscellaneous, net” in the Consolidated Statements of Income. The Company recorded a net foreign currency transaction loss of $3.8 million in fiscal 2018, a net foreign currency transaction gain of $0.2 million in fiscal 2017 and a net foreign currency transaction loss of $1.2 million in fiscal 2016.

Derivative Financial Instruments — The Company recognizes all derivative financial instruments, such as foreign exchange contracts, in the consolidated financial statements at fair value regardless of the purpose or intent for holding the instrument. Changes in the fair value of derivative financial instruments are either recognized periodically in income or in equity as a component of comprehensive income depending on whether the derivative financial instrument qualifies for hedge accounting, and if so, whether it qualifies as a fair value hedge or cash flow hedge. Generally, changes in fair values of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair values of the hedged items that relate to the hedged risks. Changes in fair values of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in other comprehensive income, net of deferred income taxes. Changes in fair value of derivatives not qualifying as hedges are reported in income. Cash flows from derivatives that are accounted for as cash flow or fair value hedges are included in the Consolidated Statements of Cash Flows in the same category as the item being hedged.

Reclassifications — Certain reclassifications have been made to the fiscal 2017 and 2016 financial statements to conform with the fiscal 2018 presentation. “Derivative instruments,” which was previously reported as a separate line item within the Consolidated Statements of Shareholders’ Equity, is now reported in “Other.” “Payment of stock-based restricted shares,” which was previously included in “Other” in the Consolidated Statements of Shareholders’ Equity, is now reported in “Payment of stock-based restricted and performance shares.” “Proceeds from sale of property, plant and equipment,” which was previously included in “Other investing activities” in the Consolidated Statements of Cash Flows, is now reported as a separate line item.

Recent Accounting Pronouncements — In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), and the FASB has since issued several amendments to this standard, which clarifies the principles for recognizing revenue. This guidance requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard supersedes all existing U.S. GAAP guidance on revenue recognition and is expected to require the use of more judgment and result in additional disclosures. The Company will adopt the standard as of October 1, 2018. The Company has elected to adopt the new revenue recognition standard following the modified retrospective approach, as permitted by the standard. This approach will result in an adjustment to retained earnings for the cumulative effect of initially applying the new standard on its adoption date.

The Company expects to record a pre-tax reduction of retained earnings of approximately $80 million upon the initial adoption of the new revenue recognition standard, which represents the cumulative impact as of the date of adoption. Primary differences between the new and existing revenue standard include changing from a point-in-time method to an over time method for certain defense and commercial segment contracts, changes to how a contract is defined, the recognition of implied performance obligations and the deferral of margin on service-type warranties. The adoption of the new revenue recognition standard will also impact the Company’s processes and controls around revenue recognition.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330), Simplifying the Measurement of Inventory. ASU 2015-11 is part of the FASB’s initiative to simplify accounting standards. The guidance requires an entity to recognize inventory within the scope of the standard at the lower of cost or net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The Company adopted ASU 2015-11 on October 1, 2017. The adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), and the FASB has since issued amendments to this standard, which requires lessees to reflect most leases on their balance sheet as lease liabilities with a corresponding right-of-use asset, while leaving presentation of lease expense in the statement of income largely unchanged. The standard also eliminates the real-estate specific provisions that exist under current U.S. GAAP and modifies the classification criteria and accounting lessors must apply to sales-type and direct financing leases. The Company will be required to adopt ASU 2016-02 and related amendments to the standard as of October 1, 2019. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-02 on the Company’s consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments. The standard requires a change in the measurement approach for credit losses on financial assets measured on an amortized cost basis from an incurred loss method to an expected loss method, thereby eliminating the requirement that a credit loss be considered probable to impact the valuation of a financial asset measured on an amortized cost basis. The standard requires the measurement of expected credit losses to be based on relevant information about past events, including historical experience, current conditions, and a reasonable and supportable forecast that affects the collectibility of the related financial asset. The Company will be required to adopt ASU 2016-13 as of October 1, 2020. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2016-13 on the Company’s consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740), Intra-Entity Transfers of Assets Other Than Inventory. The standard requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset when the transfer occurs as opposed to when the asset is transferred to an outside party as required under current U.S. GAAP. The standard does not apply to intra-entity transfers of inventory, which will continue to follow current U.S. GAAP. The Company will adopt ASU 2016-16 as of October 1, 2018 and expects to record an increase to retained earnings of approximately $45 million upon adoption under the modified retrospective approach, primarily related to intra-entity transfers of intellectual property.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard simplifies the measurement of goodwill impairment by eliminating the requirement that an entity compute the implied fair value of goodwill based on the fair values of its assets and liabilities to measure impairment. Instead, goodwill impairment will be measured as the difference between the fair value of the reporting unit and the carrying value of the reporting unit. The standard also clarifies the treatment of the income tax effect of tax deductible goodwill when measuring goodwill impairment loss. The Company will be required to adopt ASU 2017-04 as of October 1, 2020. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2017-04 on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715), Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The standard requires that an entity report the service cost component of net periodic pension and postretirement cost in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The remaining components of net benefit costs are required to be presented in the income statement separately from the service component and outside a subtotal of income from operations, if one is presented. The amendment further allows only the service cost component of net periodic pension and postretirement costs to be eligible for capitalization, when applicable. The Company will adopt ASU 2017-07 as of October 1, 2018 following the retrospective approach required by the standard. Adoption is expected to result in the reclassification of approximately $3 million of non-service costs from operating income to other income (expense).

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities. The standard more closely aligns hedge accounting with risk management strategies, simplifies the application of hedge accounting, and increases transparency as to the scope and results of hedging programs. The standard expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The Company adopted ASU 2017-12 on October 1, 2017. The adoption of ASU 2017-12 did not have a material impact on the Company’s consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220), Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The standard allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act, thereby eliminating the resulting stranded tax effect. The Company will be required to adopt ASU 2018-02 as of October 1, 2019. Early adoption is permitted. The Company plans to early adopt ASU 2018-02 as of October 1, 2018 and expects to record an increase to retained earnings of approximately $9 million upon adoption to eliminate the tax effects stranded in accumulated other comprehensive income resulting from the Tax Cuts and Jobs Act.
v3.10.0.1
Receivables
12 Months Ended
Sep. 30, 2018
Receivables [Abstract]  
Receivables
Receivables

Receivables consisted of the following (in millions):
 
September 30,
 
2018
 
2017
U.S. government:
 
 
 
Amounts billed
$
156.3

 
$
137.8

Cost and profits not billed
235.4

 
137.9

 
391.7

 
275.7

Other trade receivables
1,089.4

 
985.4

Finance receivables
11.7

 
5.8

Notes receivable
1.4

 
34.2

Other receivables
48.6

 
46.3

 
1,542.8

 
1,347.4

Less allowance for doubtful accounts
(9.9
)
 
(18.3
)
 
$
1,532.9

 
$
1,329.1



Classification of receivables in the Consolidated Balance Sheets consisted of the following (in millions):
 
September 30,
 
2018
 
2017
Current receivables
$
1,521.6

 
$
1,306.3

Long-term receivables
11.3

 
22.8

 
$
1,532.9

 
$
1,329.1



Finance and notes receivable accrual status consisted of the following (in millions):
 
September 30,
 
Finance Receivables
 
Notes Receivable
 
2018
 
2017
 
2018
 
2017
Receivables on nonaccrual status
$
10.2

 
$
3.7

 
$

 
$
21.3

Receivables past due 90 days or more and still accruing

 

 

 

 
 
 
 
 
 
 
 
Receivables subject to general reserves
1.5

 
2.1

 

 

Allowance for doubtful accounts

 

 

 

Receivables subject to specific reserves
10.2

 
3.7

 
1.4

 
34.2

Allowance for doubtful accounts
(2.8
)
 
(1.5
)
 

 
(10.0
)


Finance Receivables: Finance receivables represent sales-type leases resulting from the sale of the Company’s products and the purchase of finance receivables from lenders pursuant to customer defaults under program agreements with finance companies. As of September 30, 2018, approximately 82% of the Company’s outstanding finance receivables balance was due from three parties. Finance receivables originated by the Company generally include a residual value component. Residual values are determined based on the expectation that the underlying equipment will have a minimum fair market value at the end of the lease term. This residual value accrues to the Company at the end of the lease. The Company uses its experience and knowledge as an original equipment manufacturer and participant in end markets for the related products along with third-party studies to estimate residual values. The Company monitors these values for impairment on a continuous basis and reflects any resulting reductions in value in current earnings.

Delinquency is the primary indicator of credit quality of finance receivables. The Company maintains a general allowance for finance receivables considered doubtful of future collection based upon historical experience. Additional allowances are established based upon the Company’s evaluation of the quality of the finance receivables, including the length of time the receivables are past due, past experience of collectability and underlying economic conditions. In circumstances where the Company believes collectability is no longer reasonably assured, a specific allowance is recorded to reduce the net recognized receivable to the amount reasonably expected to be collected. The terms of the finance agreements generally give the Company the ability to take possession of the underlying collateral. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers’ financial obligations is not realized.

Notes Receivable: Notes receivable include amounts related to refinancing of trade accounts and finance receivables. As of September 30, 2018, approximately 98% of the notes receivable balance outstanding was due from one party. The Company continually evaluates the creditworthiness of its customers and establishes reserves where the Company believes collectability is no longer reasonably assured. Notes receivable are written down if management determines that the specific borrower does not have the ability to repay the loan in full. Certain notes receivable are collateralized by a security interest in the underlying assets and/or other assets owned by the debtor. The Company may incur losses in excess of recorded allowances if the financial condition of its customers were to deteriorate or the full amount of any anticipated proceeds from the sale of the collateral supporting its customers’ financial obligations is not realized.

During the second quarter of fiscal 2018, the Company received $19.6 million from a customer that had previously been accounted for under the cost recovery method of accounting and on non-accrual status. The payment resulted in the recognition of $11.5 million of margin, the reversal of $2.4 million of bad debt expense and the recognition of $6.6 million of interest income for the fiscal year ended September 30, 2018.

Quality of Finance and Notes Receivable: The Company does not accrue interest income on finance and notes receivable in circumstances where the Company believes collectability is no longer reasonably assured. Any cash payments received on nonaccrual finance and notes receivable are applied first to the principal balances. The Company does not resume accrual of interest income until the customer has shown that it is capable of meeting its financial obligations by making timely payments over a sustained period of time. The Company determines past due or delinquency status based upon the due date of the receivable.

Receivables subject to specific reserves also include loans that the Company has modified in troubled debt restructurings as a concession to customers experiencing financial difficulty. To minimize the economic loss, the Company may modify certain finance and notes receivable. Modifications generally consist of restructured payment terms and time-frames in which no payments are required. Losses on troubled debt restructurings were not significant during fiscal 2018, 2017 or 2016, respectively.

Changes in the Company’s allowance for doubtful accounts by type of receivable were as follows (in millions):
 
Fiscal Year Ended September 30, 2018
 
Finance
Receivables
 
Notes
Receivable
 
Trade and
Other
Receivables
 
Total
Allowance for doubtful accounts at beginning of year
$
1.5

 
$
10.0

 
$
6.8

 
$
18.3

Provision for doubtful accounts, net of recoveries
1.3

 
(8.2
)
 
0.9

 
(6.0
)
Charge-off of accounts

 
(1.7
)
 
(0.5
)
 
(2.2
)
Foreign currency translation

 
(0.1
)
 
(0.1
)
 
(0.2
)
Allowance for doubtful accounts at end of year
$
2.8

 
$

 
$
7.1

 
$
9.9

 
Fiscal Year Ended September 30, 2017
 
Finance
Receivables
 
Notes
Receivable
 
Trade and
Other
Receivables
 
Total
Allowance for doubtful accounts at beginning of year
$
1.0

 
$
13.0

 
$
7.2

 
$
21.2

Provision for doubtful accounts, net of recoveries
1.4

 
(1.3
)
 
0.7

 
0.8

Charge-off of accounts
(0.9
)
 
(2.2
)
 
(1.1
)
 
(4.2
)
Foreign currency translation

 
0.5

 

 
0.5

Allowance for doubtful accounts at end of year
$
1.5

 
$
10.0

 
$
6.8

 
$
18.3

v3.10.0.1
Inventories
12 Months Ended
Sep. 30, 2018
Inventory Disclosure [Abstract]  
Inventories
Inventories

Inventories consisted of the following (in millions):
 
September 30,
 
2018
 
2017
Raw materials
$
639.2

 
$
578.1

Partially finished products
354.3

 
336.6

Finished products
330.2

 
398.1

Inventories at FIFO cost
1,323.7

 
1,312.8

Less: Progress/performance-based payments on U.S. government contracts

 
(31.6
)
         Excess of FIFO cost over LIFO cost
(96.0
)
 
(82.8
)
 
$
1,227.7

 
$
1,198.4



Title to all inventories related to U.S. government contracts, which provide for progress or performance-based payments, vests with the U.S. government to the extent of unliquidated progress or performance-based payments.
v3.10.0.1
Property, Plant and Equipment
12 Months Ended
Sep. 30, 2018
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment
Property, Plant and Equipment

Property, plant and equipment consisted of the following (in millions):
 
September 30,
 
2018
 
2017
Land and land improvements
$
54.2

 
$
58.5

Buildings
297.6

 
298.5

Machinery and equipment
673.0

 
652.2

Software and related costs
164.4

 
149.6

Equipment on operating lease to others
22.1

 
30.0

Construction in progress
11.4

 

 
1,222.7

 
1,188.8

Less accumulated depreciation
(741.6
)
 
(718.9
)
 
$
481.1

 
$
469.9



Depreciation expense was $79.8 million, $81.5 million and $73.3 million in fiscal 2018, 2017 and 2016, respectively. The Company recognized a long-lived asset impairment charge of $26.9 million during fiscal 2016. Capitalized interest was insignificant for all reported periods.

Equipment on operating lease to others represents the cost of equipment shipped to customers for whom the Company has guaranteed the residual value and equipment on short-term leases. These transactions are accounted for as operating leases with the related assets capitalized and depreciated over their estimated economic lives of five to ten years. Cost less accumulated depreciation for equipment on operating lease to others at September 30, 2018 and 2017 was $17.2 million and $21.6 million, respectively.
v3.10.0.1
Goodwill and Purchased Intangible Assets
12 Months Ended
Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Purchased Intangible Assets
Goodwill and Purchased Intangible Assets

As of July 1, 2018, the Company performed its annual impairment review relative to goodwill and indefinite-lived intangible assets (principally non-amortizable trade names). The Company performed the valuation analysis with the assistance of a third-party valuation adviser. To derive the fair value of its reporting units, the Company utilized both the income and market approaches. For the annual impairment testing in the fourth quarter of fiscal 2018, the Company used a weighted-average cost of capital, depending on the reporting unit, of 10.5% to 13.5% (9.0% to 10.5% at July 1, 2017) and a terminal growth rate of 3.0% (3.0% at July 1, 2017). Under the market approach, the Company derived the fair value of its reporting units based on revenue and earnings multiples of comparable publicly-traded companies. As a corroborative source of information, the Company reconciles its estimated fair value to within a reasonable range of its market capitalization, which includes an assumed control premium (an adjustment reflecting an estimated fair value on a control basis), to verify the reasonableness of the fair value of its reporting units obtained through the aforementioned methods. The control premium is estimated based upon control premiums observed in comparable market transactions. To derive the fair value of its trade names, the Company utilized the “relief from royalty” approach.

At July 1, 2018, approximately 90% of the Company’s recorded goodwill and indefinite-lived purchased intangibles were concentrated within the JLG reporting unit in the access equipment segment. The impairment model assumes that the U.S. economy and construction spending will continue to improve over time. Assumptions utilized in the impairment analysis are highly judgmental. While the Company currently believes that an impairment of intangible assets at JLG is unlikely, events and conditions that could result in the impairment of intangibles at JLG include a sharp decline in economic conditions, significantly increased pricing pressure on JLG’s margins or other factors leading to reductions in expected long-term sales or profitability at JLG. Based on the Company’s annual impairment review, the Company concluded that there was no impairment of goodwill or indefinite-lived intangible assets. Changes in estimates or the application of alternative assumptions could have produced significantly different results.

The following table presents changes in goodwill during fiscal 2018 and 2017 (in millions):
 
Access
Equipment
 
Fire &
Emergency
 
Commercial
 
Total
Net goodwill at September 30, 2016
$
876.6

 
$
106.1

 
$
20.8

 
$
1,003.5

Foreign currency translation
9.3

 

 
0.2

 
9.5

Net goodwill at September 30, 2017
885.9


106.1


21.0


1,013.0

Foreign currency translation
(5.0
)
 

 
(0.1
)
 
(5.1
)
Net goodwill at September 30, 2018
$
880.9

 
$
106.1

 
$
20.9

 
$
1,007.9



The following table presents details of the Company’s goodwill allocated to the reportable segments (in millions):
 
September 30, 2018
 
September 30, 2017
 
Gross
 
Accumulated
Impairment
 
Net
 
Gross
 
Accumulated
Impairment
 
Net
Access Equipment
$
1,813.0

 
$
(932.1
)
 
$
880.9

 
$
1,818.0

 
$
(932.1
)
 
$
885.9

Fire & Emergency
108.1

 
(2.0
)
 
106.1

 
108.1

 
(2.0
)
 
106.1

Commercial
196.8

 
(175.9
)
 
20.9

 
196.9

 
(175.9
)
 
21.0

 
$
2,117.9

 
$
(1,110.0
)
 
$
1,007.9

 
$
2,123.0

 
$
(1,110.0
)
 
$
1,013.0



Details of the Company’s total purchased intangible assets were as follows (in millions):
 
September 30, 2018
 
Weighted-
Average
Life
 
Gross
 
Accumulated
Amortization
 
Net
Amortizable intangible assets:
 
 
 
 
 
 
 
Distribution network
39.1
 
$
55.4

 
$
(30.9
)
 
$
24.5

Technology-related
11.9
 
104.7

 
(101.8
)
 
2.9

Customer relationships
12.8
 
555.0

 
(502.3
)
 
52.7

Other
16.2
 
16.4

 
(14.8
)
 
1.6

 
14.7
 
731.5

 
(649.8
)
 
81.7

Non-amortizable trade names
 
 
387.7

 

 
387.7

 
 
 
$
1,119.2

 
$
(649.8
)
 
$
469.4

 
September 30, 2017
 
Weighted-
Average
Life
 
Gross
 
Accumulated
Amortization
 
Net
Amortizable intangible assets:
 
 
 
 
 
 
 
Distribution network
39.1
 
$
55.4

 
$
(29.5
)
 
$
25.9

Technology-related
11.9
 
104.7

 
(99.7
)
 
5.0

Customer relationships
12.8
 
555.0

 
(467.6
)
 
87.4

Other
16.3
 
16.4

 
(14.7
)
 
1.7

 
14.4
 
731.5

 
(611.5
)
 
120.0

Non-amortizable trade names
 
 
387.8

 

 
387.8

 
 
 
$
1,119.3

 
$
(611.5
)
 
$
507.8



When determining the value of customer relationships for purposes of allocating the purchase price of an acquisition, the Company looks at existing customer contracts of the acquired business to determine if they represent a reliable future source of income and hence, a valuable intangible asset for the Company. The Company determines the fair value of the customer relationships based on the estimated future benefits the Company expects from the acquired customer contracts. In performing its evaluation and estimation of the useful lives of customer relationships, the Company looks to the historical growth rate of revenue of the acquired company’s existing customers as well as the historical attrition rates.

In connection with the valuation of intangible assets, a 40-year life was assigned to the value of the Pierce distribution network (net book value of $23.8 million at September 30, 2018). The Company believes Pierce maintains the largest North American fire apparatus distribution network. Pierce has exclusive contracts with each distributor related to the fire apparatus product offerings manufactured by Pierce. The useful life of the Pierce distribution network was based on a historical turnover analysis. Non-compete intangible asset lives are based on the terms of the applicable agreements.

The estimated future amortization expense of purchased intangible assets for the five years succeeding September 30, 2018 are as follows: 2019 - $36.9 million; 2020 - $11.0 million; 2021 - $5.3 million; 2022 - $4.9 million and 2023 - $3.5 million.
v3.10.0.1
Other Long-Term Assets
12 Months Ended
Sep. 30, 2018
Other Assets, Noncurrent Disclosure [Abstract]  
Other Assets Disclosure
Other Long-Term Assets

Other long-term assets consisted of the following (in millions):
 
September 30,
 
2018
 
2017
Rabbi trust, less current portion
$
20.9

 
$
20.6

Customer finance receivables
7.6

 
1.7

Customer notes receivable
0.1

 
25.7

Deferred income taxes, net
9.7

 
4.2

Investments in unconsolidated affiliates
12.9

 
15.5

Other
16.4

 
9.3

 
67.6

 
77.0

Less allowance for doubtful receivables
(1.7
)
 
(8.6
)
 
$
65.9

 
$
68.4



The rabbi trust (the “Trust”) holds investments to fund certain of the Company’s obligations under its nonqualified supplemental executive retirement plan (SERP). Trust investments include money market and mutual funds. The Trust assets are subject to claims of the Company’s creditors.
v3.10.0.1
Leases
12 Months Ended
Sep. 30, 2018
Leases [Abstract]  
Leases
Leases

Certain administrative and production facilities and equipment are leased under long-term agreements. Most leases contain renewal options for varying periods, and certain leases include options to purchase the leased property during or at the end of the lease term. Leases generally require the Company to pay for insurance, taxes and maintenance of the property. Leased capital assets included in net property, plant and equipment were immaterial at September 30, 2018 and 2017.

Other facilities and equipment are leased under arrangements that are accounted for as noncancelable operating leases. Total rental expense for property, plant and equipment under noncancelable operating leases was $47.1 million, $48.0 million and $45.0 million in fiscal 2018, 2017 and 2016, respectively.

Future minimum lease payments due under operating leases at September 30, 2018 were as follows: 2019 - $23.6 million; 2020 - $18.3 million; 2021 - $14.5 million; 2022 - $7.6 million; 2023 - $4.6 million; and thereafter - $2.8 million.
v3.10.0.1
Credit Agreements
12 Months Ended
Sep. 30, 2018
Debt Disclosure [Abstract]  
Credit Agreements
Credit Agreements

The Company was obligated under the following debt instruments (in millions):
 
 
September 30, 2018
 
 
Principal
 
Debt Issuance Costs
 
Debt, Net
Senior Term Loan
 
$
275.0

 
$
(0.8
)
 
$
274.2

5.375% Senior notes due March 2025
 
250.0

 
(2.4
)
 
247.6

4.600% Senior notes due May 2028
 
300.0

 
(3.8
)
 
296.2

 
 
$
825.0

 
$
(7.0
)
 
$
818.0


 
 
September 30, 2017
 
 
Principal
 
Debt Issuance Costs
 
Debt, Net
Senior Secured Term Loan

$
335.0


$
(0.8
)
 
$
334.2

5.375% Senior notes due March 2022
 
250.0

 
(3.5
)
 
246.5

5.375% Senior notes due March 2025
 
250.0

 
(2.8
)
 
247.2

 
 
$
835.0

 
$
(7.1
)
 
827.9

Less current maturities
 
 
 
 
 
(20.0
)
 
 
 
 
 
 
$
807.9

 
 
 
 
 
 
 
Other short-term debt
 
 
 
 
 
$
3.0

Current maturities of long-term debt
 
 
 
 
 
20.0

 
 
 
 


 
$
23.0



On April 3, 2018, the Company entered into a Second Amended and Restated Credit Agreement with various lenders (the “Credit Agreement”). The Credit Agreement provides for (i) an unsecured revolving credit facility (the “Revolving Credit Facility”) that matures in April 2023 with an initial maximum aggregate amount of availability of $850 million and (ii) an unsecured $325 million term loan (the “Term Loan”) due in quarterly principal installments of $4.1 million commencing September 30, 2019 with a balloon payment of $264.1 million due at maturity in April 2023. During the third quarter of fiscal 2018, the Company prepaid all required quarterly principal installments on the Term Loan through June 2022. The Company recognized $0.6 million of debt extinguishment expense in fiscal 2018 as a result of the amendment, including acceleration of $0.2 million of debt issuance costs previously capitalized and $0.4 million of third-party fees. In addition, $2.9 million of new debt issuance costs were capitalized and are being amortized over the term of the Credit Agreement.

At September 30, 2018, outstanding letters of credit of $85.5 million reduced the available capacity under the Revolving Credit Facility to $764.5 million.

Effective April  3, 2018, to transition from the secured facilities under the previous credit agreement to unsecured facilities under the Credit Agreement, (i) the guaranties made pursuant to the previous credit agreement and the related loan documents were terminated (other than the Company’s guaranty under the previous credit agreement of certain obligations of its subsidiaries, which guaranty was superseded and replaced by a similar guaranty made by the Company under the Credit Agreement), and (ii) the collateral documents executed by the Company and/or its subsidiaries in connection with the previous credit agreement and the related loan documents and the liens created under such collateral documents were terminated, released and discharged.

Under the Credit Agreement, the Company is obligated to pay (i) an unused commitment fee ranging from 0.125% to 0.275% per annum of the average daily unused portion of the aggregate revolving credit commitments under the Credit Agreement and (ii) a fee ranging from 0.563% to 1.75% per annum of the maximum amount available to be drawn for each letter of credit issued and outstanding under the Credit Agreement.

Borrowings under the Credit Agreement bear interest at a variable rate equal to (i) LIBOR plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied, or (ii) for dollar-denominated loans only, the base rate (which is the highest of (a) the administrative agent’s prime rate, (b) the federal funds rate plus 0.50% or (c) the sum of 1% plus one-month LIBOR) plus a specified margin, which may be adjusted upward or downward depending on whether certain criteria are satisfied. At September 30, 2018, the interest spread on the Revolving Credit Facility and Term Loan was 125 basis points. The weighted-average interest rate on borrowings outstanding under the Term Loan at September 30, 2018 was 3.49%.

The Credit Agreement contains various restrictions and covenants, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions, subject to certain exceptions, on the ability of the Company and certain of its subsidiaries to consolidate or merge, create liens, incur additional indebtedness, dispose of assets, consummate acquisitions and make investments in joint ventures and foreign subsidiaries.

The Credit Agreement contains the following financial covenants:
Leverage Ratio: A maximum leverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated indebtedness to consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and certain other items (EBITDA) as of the last day of any fiscal quarter of 3.75 to 1.00.
Interest Coverage Ratio: A minimum interest coverage ratio (defined as, with certain adjustments, the ratio of the Company’s consolidated EBITDA to the Company’s consolidated cash interest expense) as of the last day of any fiscal quarter of 2.50 to 1.00.

With certain exceptions, the Credit Agreement limits the ability of the Company to pay dividends and other distributions, including repurchases of shares of its Common Stock. However, so long as no event of default exists under the Credit Agreement or would result from such payment, the Company may pay dividends and other distributions after April 3, 2018 in an aggregate amount not exceeding the sum of:
i.
$1.46 billion;
ii.
50% of the consolidated net income of the Company and its subsidiaries (or if such consolidated net income is a deficit, minus 100% of such deficit), accrued on a cumulative basis during the period beginning on April 3, 2018 and ending on the last day of the fiscal quarter immediately preceding the date of the applicable proposed dividend or distribution; and
iii.
100% of the aggregate net proceeds received by the Company subsequent to April 3, 2018 either as a contribution to its common equity capital or from the issuance and sale of its Common Stock.

The Company was in compliance with the financial covenants contained in the Credit Agreement as of September 30, 2018.

In February 2014, the Company issued $250.0 million of 5.375% unsecured senior notes due March 1, 2022 (the “2022 Senior Notes”). In March 2015, the Company issued $250.0 million of 5.375% unsecured senior notes due March 1, 2025 (the “2025 Senior Notes”). On May 17, 2018, the Company issued $300.0 million of 4.600% unsecured senior notes due May 15, 2028 (the “2028 Senior Notes”) at a $1.0 million discount. The Company used the net proceeds from the sale of the 2028 Senior Notes to redeem all of the outstanding 2022 Senior Notes at a price of 102.688% and to pre-pay $49.2 million of quarterly principal installment payments under the Term Loan. The Company recognized $9.7 million of debt extinguishment expense, included in “Interest expense,” associated with the 2028 Senior Notes transaction in fiscal 2018, comprised of unamortized debt issuance costs of $3.0 million and the call premium on the 2022 Senior Notes of $6.7 million. In addition, $2.9 million of debt issuance costs were capitalized and are being amortized over the term of the 2028 Senior Notes. The 2025 Senior Notes and the 2028 Senior Notes were issued pursuant to separate indentures (the “Indentures”) between the Company and a trustee. The Indentures contain customary affirmative and negative covenants. The Company has the option to redeem the 2025 Senior Notes for a premium after March 1, 2020. The Company has the option to redeem the 2028 Senior Notes at any time for a premium.

On April 3, 2018, the Company also entered into a First Supplemental Indenture relating to the 2025 Senior Notes, which amended and supplemented the 2025 Senior Notes indenture to release and discharge all note guaranties made by subsidiaries of the Company pursuant thereto as a result of the termination of all guaranties of the subsidiaries of the Company made pursuant to the Credit Agreement and the related loan documents.

The fair value of the long-term debt is estimated based upon Level 2 inputs to reflect market rate of the Company’s debt. At September 30, 2018, the fair value of the 2025 Senior Notes and the 2028 Senior Notes was estimated to be $257 million ($264 million at September 30, 2017) and $299 million, respectively. The fair value of the Term Loan approximated book value at both September 30, 2018 and 2017. See Note 14 of the Notes to Consolidated Financial Statements for the definition of a Level 2 input.
v3.10.0.1
Warranties
12 Months Ended
Sep. 30, 2018
Product Warranties Disclosures [Abstract]  
Warranties
Warranties

The Company’s products generally carry explicit warranties that extend from six months to five years, based on terms that are generally accepted in the marketplace. Selected components (such as engines, transmissions, tires, etc.) included in the Company’s end products may include manufacturers’ warranties. These manufacturers’ warranties are generally passed on to the end customer of the Company’s products, and the customer would generally deal directly with the component manufacturer. Warranty costs recorded were $57.0 million, $60.4 million and $46.8 million in fiscal 2018, 2017 and 2016, respectively.

The Company offers a variety of extended warranty programs. The premiums received for an extended warranty are generally deferred until the expiration of the standard warranty period. The unearned premium is then recognized in income over the term of the extended warranty period in proportion to the costs that are expected to be incurred. Unamortized extended warranty premiums totaled $30.8 million at both September 30, 2018 and 2017.

Changes in the Company’s warranty liability and unearned extended warranty premiums were as follows (in millions):
 
Fiscal Year Ended
September 30,
 
2018
 
2017
Balance at beginning of year
$
98.8

 
$
89.6

Warranty provisions
56.6

 
57.4

Settlements made
(49.8
)
 
(51.8
)
Changes in liability for pre-existing warranties, net
2.4

 
2.5

Premiums received
12.7

 
12.4

Amortization of premiums received
(14.2
)
 
(12.0
)
Foreign currency translation
(0.5
)
 
0.7

Balance at end of year
$
106.0

 
$
98.8



Provisions for estimated warranty and other related costs are recorded at the time of sale and are periodically adjusted to reflect actual experience. Certain warranty and other related claims involve matters of dispute that ultimately are resolved by negotiation, arbitration or litigation. At times, warranty issues arise that are beyond the scope of the Company’s historical experience. It is reasonably possible that additional warranty and other related claims could arise from disputes or other matters in excess of amounts accrued; however, the Company does not expect that any such amounts, while not determinable, would have a material effect on the Company’s consolidated financial condition, results of operations or cash flows.
v3.10.0.1
Guarantee Arrangements
12 Months Ended
Sep. 30, 2018
Guarantees [Abstract]  
Guarantee Arrangements
Guarantee Arrangements

The Company is party to multiple agreements whereby at September 30, 2018 and 2017 it guaranteed an aggregate of $685.3 million and $568.2 million, respectively, in indebtedness of customers. The Company estimated that its maximum loss exposure under these contracts at September 30, 2018 and 2017 was $121.8 million and $101.9 million, respectively. Under the terms of these and various related agreements and upon the occurrence of certain events, the Company generally has the ability to, among other things, take possession of the underlying collateral. If the financial condition of the customers were to deteriorate and result in their inability to make payments, then additional accruals may be required. While the Company does not expect to experience losses under these agreements that are materially in excess of the amounts reserved, it cannot provide any assurance that the financial condition of the third parties will not deteriorate resulting in the third parties’ inability to meet their obligations. In the event that this occurs, the Company cannot guarantee that the collateral underlying the agreements will be sufficient to avoid losses materially in excess of the amounts reserved. Any losses under these guarantees would generally be mitigated by the value of any underlying collateral, including financed equipment, and are generally subject to the finance company’s ability to provide the Company clear title to foreclosed equipment and other conditions. During periods of economic weakness, collateral values generally decline and can contribute to higher exposure to losses.

Changes in the Company’s credit guarantee liability were as follows (in millions):
 
Fiscal Year Ended
September 30,
 
2018
 
2017
Balance at beginning of year
$
9.1

 
$
8.4

Provision for new credit guarantees
5.1

 
3.2

Changes for pre-existing guarantees, net
(0.9
)
 
0.5

Amortization of previous guarantees
(2.7
)
 
(3.1
)
Foreign currency translation
(0.2
)
 
0.1

Balance at end of year
$
10.4

 
$
9.1

v3.10.0.1
Shareholders' Equity
12 Months Ended
Sep. 30, 2018
Stockholders' Equity Note [Abstract]  
Shareholders' Equity
Shareholders’ Equity

On August 31, 2015 the Company’s Board of Directors increased the Company’s Common Stock repurchase authorization by 10,000,000 shares, increasing the repurchase authorization to 10,299,198. As of September 30, 2018, the Company repurchased 6,059,664 shares under this authorization, leaving 4,239,534 shares of Common Stock remaining under this repurchase authorization as of September 30, 2018. The Company repurchased 3.3 million shares at a cost of $249.3 million during fiscal 2018. The Company did not repurchase any shares under this authorization during fiscal 2017. Including shares repurchased under prior authorizations, the Company repurchased 2.5 million shares at a cost of $100.1 million during fiscal 2016. The Company is restricted by its Credit Agreement from repurchasing shares in certain situations. See Note 9 of the Notes to Consolidated Financial Statements for information regarding these restrictions. The Company retired 17.0 million shares of treasury stock during fiscal 2018.
v3.10.0.1
Derivative Financial Instruments and Hedging Activities
12 Months Ended
Sep. 30, 2018
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities
13.    Derivative Financial Instruments and Hedging Activities

The Company has used forward foreign currency exchange contracts (derivatives) to reduce the exchange rate risk of specific foreign currency denominated transactions. These derivatives typically require the exchange of a foreign currency for U.S. dollars at a fixed rate at a future date. At times, the Company has designated these hedges as either cash flow hedges or fair value hedges under FASB ASC Topic 815, Derivatives and Hedging as follows:

Fair Value Hedging Strategy - The Company enters into forward foreign exchange contracts to hedge certain firm commitments denominated in foreign currencies. The purpose of the Company’s foreign currency hedging activities is to protect the Company from risk that the eventual U.S. dollar-equivalent cash flows from the sale of products to international customers will be adversely affected by changes in exchange rates.

Cash Flow Hedging Strategy - To protect against the impact of movements in foreign exchange rates on forecasted purchases or sales transactions denominated in foreign currency, the Company has a foreign currency cash flow hedging program. The Company hedges portions of its forecasted transactions denominated in foreign currency with forward contracts.

At September 30, 2018, the total notional U.S. dollar equivalent of outstanding forward foreign exchange contracts designated as hedges in accordance with ASC Topic 815 was $16.4 million. Net gains or losses related to these contracts are recorded within the same line item in the Consolidated Statements of Income impacted by the hedged item. The maximum length of time the Company is hedging its exposure to the variability in future cash flows is under twelve months.

The Company has entered into forward foreign currency exchange contracts to create an economic hedge to manage foreign exchange risk exposure associated with non-functional currency denominated receivables and payables resulting from global sales and sourcing activities. The Company has not designated these derivative contracts as hedge transactions under FASB ASC Topic 815, and accordingly, the mark-to-market impact of these derivatives is recorded each period in current earnings within “Miscellaneous, net” in the Consolidated Statements of Income. The fair value of foreign currency related derivatives is included in the Consolidated Balance Sheets in “Other current assets” and “Other current liabilities.” At September 30, 2018, the U.S. dollar equivalent of these outstanding forward foreign exchange contracts totaled $69.6 million in notional amounts covering a variety of foreign currency exposures.

The Company entered into interest rate contracts to create an economic hedge to manage changes in interest rates on an executory sales contract that exposes the Company to interest rate risk based on changes in market interest rates. These contracts matured in the first quarter of fiscal 2018. The Company did not designate these derivative contracts as hedge transactions under FASB ASC Topic 815, and accordingly, the mark-to-market impact of these derivatives was recorded each period in current earnings within “Miscellaneous, net” in the Consolidated Statements of Income. The fair value of the interest rate related derivatives was included in the Consolidated Balance Sheets in “Other current assets” and “Other current liabilities.” There were no outstanding interest rate contracts at September 30, 2018.

The fair values of all open derivative instruments were as follows (in millions):
 
September 30, 2018
 
September 30, 2017
 
Other
Current
Assets
 
Other
Current
Liabilities
 
Other
Current
Assets
 
Other
Current
Liabilities
Cash flow hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
$
0.4

 
$

 
$

 
$
0.4

 
 
 
 
 
 
 
 
Not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
0.4

 
0.2

 
0.5

 
0.8

Interest rate contracts

 

 
0.3

 
0.7

 
$
0.8

 
$
0.2

 
$
0.8

 
$
1.9


The pre-tax effects of derivative instruments consisted of the following (in millions):
 
Classification of
Gains (Losses)
 
Fiscal Year Ended September 30,
 
 
2018
 
2017
 
2016
Cash flow hedges:
 
 
 
 
 
 
 
Foreign exchange contracts
Net sales
 
$

 
$
(0.1
)
 
$

Foreign exchange contracts
Cost of sales
 
(0.5
)
 
(0.1
)
 

Foreign exchange contracts
Miscellaneous, net
 

 
(0.1
)
 
(0.2
)
 
 
 
 
 
 
 
 
Not designated as hedging instruments:
 
 
 
 
 
 
 
Foreign exchange contracts
Miscellaneous, net
 
(2.4
)
 
3.5

 
(7.6
)
Interest rate contracts
Miscellaneous, net
 
(0.7
)
 
0.2

 
(0.2
)
 
 
 
$
(3.6
)
 
$
3.4

 
$
(8.0
)
v3.10.0.1
Fair Value Measurement
12 Months Ended
Sep. 30, 2018
Fair Value Disclosures [Abstract]  
Fair Value Measurement
Fair Value Measurement

FASB ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. FASB ASC Topic 820 requires disclosures that categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value, while Level 3 generally requires significant management judgment.

The three levels are defined as follows:

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

Level 2:
Observable inputs other than quoted prices in active markets for identical assets or liabilities, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3:
Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

There were no transfers of assets between levels during fiscal 2018 or 2017.

The fair values of the Company’s financial assets and liabilities were as follows (in millions):
 
Level 1
 
Level 2
 
Level 3
 
Total
September 30, 2018
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
SERP plan assets (a)
$
22.1

 
$

 
$

 
$
22.1

Foreign currency exchange derivatives (b)

 
0.8

 

 
0.8

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Foreign currency exchange derivatives (b)
$

 
$
0.2

 
$

 
$
0.2



 
Level 1
 
Level 2
 
Level 3
 
Total
September 30, 2017
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
SERP plan assets (a)
$
21.7

 
$

 
$

 
$
21.7

Foreign currency exchange derivatives (b)

 
0.5

 

 
0.5

Interest rate contracts (c)

 
0.3

 

 
0.3

 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Foreign currency exchange derivatives (b)
$

 
$
1.2

 
$

 
$
1.2

Interest rate contracts (c)

 
0.7

 

 
0.7


_________________________
(a) 
Represents investments in a rabbi trust for the Company’s non-qualified SERP. The fair values of these investments are determined using a market approach. Investments include mutual funds for which quoted prices in active markets are available. The Company records changes in the fair value of investments in “Miscellaneous, net” in the Consolidated Statements of Income.
(b) 
Based on observable market transactions of forward currency prices.
(c) 
Based on observable market transactions of interest rate swap prices.

See Notes 9 and 17 of the Notes to Consolidated Financial Statements for fair value information related to debt and pension assets.

Items Measured at Fair Value on a Nonrecurring Basis In addition to items that are measured at fair value on a recurring basis, the Company also has assets and liabilities in its balance sheet that are measured at fair value on a nonrecurring basis. As these assets and liabilities are not measured at fair value on a recurring basis, they are not included in the tables above. Assets and liabilities that are measured at fair value on a nonrecurring basis include long-lived assets (See Note 5 of the Notes to Consolidated Financial Statements for impairments of long-lived assets and Note 6 of the Notes to Consolidated Financial Statements for impairment valuation analysis of intangible assets). The Company has determined that the fair value measurements related to each of these assets rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets, as observable inputs are not available. As such, the Company has determined that each of these fair value measurements reside within Level 3 of the fair value hierarchy.
v3.10.0.1
Stock-Based Compensation
12 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
Stock-Based Compensation

In February 2017, the Company’s shareholders approved the 2017 Incentive Stock and Awards Plan (the “2017 Stock Plan”). The 2017 Stock Plan replaced the 2009 Incentive Stock and Awards Plan (as amended, the “2009 Stock Plan”). While no new awards will be granted under the 2009 Stock Plan or its predecessor, the 2004 Incentive Stock and Awards Plan, awards previously made under these two plans that were outstanding as of the approval date of the 2017 Stock Plan will remain outstanding and continue to be governed by the provisions of the respective stock plan under which they were issued. At September 30, 2018, the Company had reserved 7,919,214 shares of Common Stock available for issuance to provide for the exercise of outstanding stock options and the issuance of Common Stock under incentive compensation awards, including awards issued prior to the effective date of the 2017 Stock Plan.

Under the 2017 Stock Plan, officers, directors, including non-employee directors, and employees of the Company may be granted stock options, stock appreciation rights (SAR), performance shares, performance units, shares of Common Stock, restricted stock, restricted stock units (RSU) or other stock-based awards. The 2017 Stock Plan provides for the granting of options to purchase shares of the Company’s Common Stock at not less than the fair market value of such shares on the date of grant. Stock options granted under the 2017 Stock Plan generally become exercisable in equal installments over a three-year period, beginning with the first anniversary of the date of grant of the option, unless a shorter or longer duration is established by the Human Resources Committee of the Board of Directors at the time of the option grant. Stock options terminate not more than ten years from the date of grant. The exercise price of stock options and the market value of restricted stock unit awards are determined based on the closing market price of the Company’s Common Stock on the date of grant. Except to the extent vesting is accelerated upon early retirement and except for performance shares and performance units, vesting is based solely on continued service as an employee of the Company. The Company recognizes stock-based compensation expense over the requisite service period for vesting of an award, or to an employee’s eligible retirement date, if earlier and applicable.

Information related to the Company’s equity-based compensation plans in effect as of September 30, 2018 was as follows:
Plan Category 
 
Number of Securities
to be Issued Upon
Exercise of Outstanding
Options or Vesting of
Share Awards
 
Weighted-Average
Exercise Price of
Outstanding
Options
 
Number of
Securities Remaining
Available for Future
Issuance Under Equity
Compensation Plans
Equity compensation plans approved by security holders
 
1,915,157

 
$
57.03

 
6,004,057

Equity compensation plans not approved by security holders
 

 

 

 
 
1,915,157

 
$
57.03

 
6,004,057



Total stock-based compensation expense (income) was as follows (in millions):
 
Fiscal Year Ended September 30,
 
2018
 
2017
 
2016
Stock options
$
6.6

 
$
7.5

 
$
6.7

Stock awards (shares and units)
13.7

 
11.6

 
9.7

Performance share awards
6.4

 
3.3

 
2.3

Cash-settled stock appreciation rights
(0.2
)
 
3.3

 
3.4

Cash-settled restricted stock unit awards
0.4

 
0.5

 
0.9

Total stock-based compensation cost
26.9

 
26.2

 
23.0

Income tax benefit recognized for stock-based compensation
(5.8
)
 
(9.6
)
 
(8.4
)
 
$
21.1

 
$
16.6

 
$
14.6



Stock Options — A summary of the Company’s stock option activity is as follows:
 
Fiscal Year Ended September 30,
 
2018
 
2017
 
2016
 
Options
 
Weighted-
Average
Exercise
Price
 
Options
 
Weighted-
Average
Exercise
Price
 
Options
 
Weighted-
Average
Exercise
Price
Outstanding, beginning of year
1,531,691

 
$
45.14

 
2,104,929

 
$
39.55

 
2,369,872