251,635

200,530

Pension obligations

22,682

16,286

64,855

64,794

Other liabilities

36,326

24,102

Long-term debt

265,000

200,000

Preferred stock, par value $.01 per share, authorized 10,000,000 shares

640,498

505,712

Shareholders' equity:

Common stock, par value $.01 per share, authorized 50,000,000 shares; issued 30,596,940 and 30,534,786 shares in 2019 and 2018, respectively

306

305

Additional paid-in capital

292,408

291,190

Accumulated other comprehensive loss, net of tax

684,741

606,837

(43,974)

(31,528)

Total stockholders' equity before treasury stock

933,481

866,804

Less treasury stock, at cost (4,615,627 and 4,623,958 common shares in 2019 and 2018, respectively)

(107,259)

(107,394)

Total Liabilities and Shareholders' Equity

826,222

759,410

$ 1,466,720

$ 1,265,122

[1]	Previously “cost and estimated earnings on long-term contracts”
[2]	Previously “advance payments on long-term contracts” and “current portion of deferred revenue”

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
CONSOLIDATED BALANCE SHEETS
Allowance for Doubtful Accounts Receivable, Current	$ 1,505	$ 1,683
Preferred Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Common Stock, Par or Stated Value Per Share	$ 0.01	$ 0.01
Common Stock, Shares Authorized	50,000,000	50,000,000
Common stock, shares issued	30,596,940	30,534,786
Treasury stock, shares	4,615,627	4,623,958

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock [Member]	Total
Beginning Balance at Sep. 30, 2016	$ 304	$ 290,588	$ 471,272	$ (39,283)	$ (107,772)	$ 615,109
Balance (in shares) at Sep. 30, 2016	30,364
Comprehensive income (loss):
Net earnings	$ 0	0	53,703	0	0	53,703
Translation adjustments, net of tax	0	0	0	6,383	0	6,383
Net unrecognized actuarial (loss) gain, net of tax	0	0	0	5,573	0	5,573
Forward exchange contracts, net of tax	0	0	0	19	0	19
Cash dividends declared	0	0	(8,257)	0	0	(8,257)
Stock options and stock compensation plans, net of tax	$ 1	(803)	0	0	190	(612)
Stock options and stock compensation plans, net of tax (in shares)	105
Ending Balance at Sep. 30, 2017	$ 305	289,785	516,718	(27,308)	(107,582)	671,918
Ending Balance (in shares) at Sep. 30, 2017	30,469
Comprehensive income (loss):
Net earnings	$ 0	0	92,136	0	0	92,136
Translation adjustments, net of tax	0	0	0	(2,254)	0	(2,254)
Net unrecognized actuarial (loss) gain, net of tax	0	0	0	(2,003)	0	(2,003)
Forward exchange contracts, net of tax	0	0	0	37	0	37
Cash dividends declared	0	0	(8,278)	0	0	(8,278)
Reclassification from accumulated other comprehensive loss as a result of the adoption of new accounting standard ASU 2018-02	0	0	6,261	0	0	6,261
Stock options and stock compensation plans, net of tax	$ 0	1,405	0	0	188	1,593
Stock options and stock compensation plans, net of tax (in shares)	66
Ending Balance at Sep. 30, 2018	$ 305	291,190	606,837	(31,528)	(107,394)	759,410
Ending Balance (in shares) at Sep. 30, 2018	30,535
Comprehensive income (loss):
Net earnings	$ 0	0	81,039	0	0	81,039
Translation adjustments, net of tax	0	0	0	(6,474)	0	(6,474)
Net unrecognized actuarial (loss) gain, net of tax	0	0	0	(6,066)	0	(6,066)
Forward exchange contracts, net of tax	0	0	0	94	0	94
Cash dividends declared	0	0	(8,302)	0	0	(8,302)
Reclassification from accumulated other comprehensive loss as a result of the adoption of new accounting standard ASU 2018-02						(6,300)
Stock options and stock compensation plans, net of tax	$ 1	1,218	0	0	135	1,354
Stock options and stock compensation plans, net of tax (in shares)	62
Ending Balance at Sep. 30, 2019	$ 306	$ 292,408	684,741	$ (43,974)	$ (107,259)	826,222
Ending Balance (in shares) at Sep. 30, 2019	30,597
Comprehensive income (loss):
Adoption of new accounting standard ASU 2014-09			$ 5,167			$ 5,167

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax	$ 0	$ 0	$ 0
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, Tax	1,817	(1,326)	(2,938)
Other Comprehensive Income (Loss), Derivatives Qualifying as Hedges, Tax	$ (22)	$ (41)	$ (66)
Common Stock, Dividends, Per Share, Declared	$ 0.32	$ 0.32	$ 0.32
Adjustment to Additional Paid in Capital, Income Tax Effect from Share-based Compensation, Net	$ 0	$ 0	$ 0

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net earnings	$ 81,039	$ 92,136	$ 53,703
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	40,050	37,755	32,229
Stock compensation expense	5,353	5,218	5,444
Changes in assets and liabilities	(9,944)	(10,315)	(17,889)
Change in property, plant and equipment from gain on building sale	(8,922)	0	0
Effect of deferred taxes on tax provision	61	(21,584)	1,360
Pension contributions	(2,500)	(9,951)	(2,677)
Other	0	0	(4,830)
Net cash provided by operating activities	105,137	93,259	67,340
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired	(96,777)	(11,445)	(198,628)
Capital expenditures	(37,183)	(20,589)	(29,728)
Additions to capitalized software	(8,386)	(9,573)	(9,002)
Proceeds from sale of building and land	17,201	0	1,184
Proceeds from life insurance	0	0	2,307
Net cash used by investing activities	(125,145)	(41,607)	(233,867)
Cash flows from financing activities:
Proceeds from long-term debt	131,261	55,000	257,000
Principal payments on long-term debt	(65,000)	(110,000)	(92,000)
Dividends paid	(8,302)	(8,278)	(8,257)
Debt issuance costs	(1,071)	0	0
Other	(3,371)	(3,078)	20
Net cash provided (used) by financing activities	53,517	(66,356)	156,763
Effect of exchange rate changes on cash and cash equivalents	(2,178)	(335)	1,455
Net increase (decrease) in cash and cash equivalents	31,331	(15,039)	(8,309)
Cash and cash equivalents at beginning of year	30,477	45,516	53,825
Cash and cash equivalents at end of year	61,808	30,477	45,516
Changes in assets and liabilities:
Accounts receivable, net	(7,230)	(2,789)	(23,587)
Contract assets	(66,885)	(5,748)	(18,540)
Inventories	10,150	(9,830)	3,959
Other assets and liabilities	8,020	(695)	(2,014)
Accounts payable	7,400	9,442	8,735
Contract liabilities	36,751	(1,466)	7,914
Accrued expenses	1,850	771	5,644
Supplemental cash flow information:
Interest paid	8,076	8,540	3,731
Income taxes paid (including state & foreign)	$ 26,084	$ 8,789	$ 25,674

Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

1. Summary of Significant Accounting Policies

A. Principles of Consolidation

The Consolidated Financial Statements include the accounts of ESCO Technologies Inc. (ESCO) and its wholly owned subsidiaries (the Company). All significant intercompany transactions and accounts have been eliminated in consolidation.

B. Basis of Presentation

The Company’s fiscal year ends on September 30. Throughout the Consolidated Financial Statements, unless the context indicates otherwise, references to a year (for example 2019) refer to the Company’s fiscal year ending on September 30 of that year.

The Company accounts for shipping and handling costs on a gross basis and they are included in net sales. The Company accounts for taxes collected from customers and remitted to governmental authorities on a net basis and they are excluded from net sales.

C. Nature of Operations

The Company is organized based on the products and services it offers, and classifies its business operations in segments for financial reporting purposes. Under the current organization structure, the Company has four segments for financial reporting purposes: Filtration/Fluid Flow (Filtration), RF Shielding and Test (Test), Utility Solutions Group (USG) and Technical Packaging.

Filtration: The companies within this segment primarily design and manufacture specialty filtration products, including hydraulic filter elements and fluid control devices used in commercial aerospace applications; unique filter mechanisms used in micro-propulsion devices for satellites; custom designed filters for manned aircraft and submarines; products and systems to reduce vibration and/or acoustic signatures and otherwise reduce or obscure a vessel’s signature, and other communications, sealing, surface control and hydrodynamic related applications to enhance U.S. Navy maritime survivability; precision-tolerance machined components for the aerospace and defense industry; and metal processing services.

USG: The companies within this segment provide high-end, intelligent, diagnostic test and data management solutions for the electric power delivery industry, and decision support tools for the renewable energy industry, primarily wind.

Test: ETS-Lindgren Inc. provides its customers with the ability to identify, measure and contain magnetic, electromagnetic and acoustic energy.

Technical Packaging: The companies within this segment provide innovative solutions to the medical and commercial markets for thermoformed and precision molded pulp fiber packages and specialty products using a wide variety of thin gauge plastics and pulp.

D. Use of Estimates

The preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities. Actual results could differ from those estimates.

E. Revenue Recognition

On October 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (ASC 606). Significant changes to our policies resulting from the adoption are provided below. We adopted ASC 606 using the modified retrospective transition method applied to contracts that were not substantially complete at the end of fiscal year 2018. We recorded a $5.2 million adjustment to increase retained earnings to reflect the cumulative impact of adopting this standard at the beginning of fiscal year 2019, primarily related to certain long-term contracts in our Filtration and Technical Packaging segments that converted to the cost-to-cost method for revenue recognition. The comparative information has not been restated and is reported under the accounting standards in effect for those periods. A reconciliation of the financial statement line items impacted for the year ended September 30, 2019 under ASC 606 to the prior accounting standards is provided in Note 16.

Revenue Recognition

Revenue is recognized when control of the goods or services promised under the contract is transferred to the customer either at a point in time (e.g., upon delivery) or over time (e.g., as we perform under the contract). We account for a contract when it has approval and commitment from both parties, the rights and payment terms of the parties are identified, the contract has commercial substance and collectability of consideration is probable. Contracts are reviewed to determine whether there is one or multiple performance obligations. A performance obligation is a promise to transfer a distinct good or service to a customer and represents the unit of accounting for revenue recognition. For contracts with multiple performance obligations, the expected consideration, or the transaction price, is allocated to each performance obligation identified in the contract based on the relative standalone selling price of each performance obligation. Revenue is then recognized for the transaction price allocated to the performance obligation when control of the promised goods or services underlying the performance obligation is transferred.

Payment terms with customers vary by the type and location of the customer and the products or services offered. The Company does not adjust the promised amount of consideration for the effects of significant financing components based on the expectation that the period between when the Company transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Arrangements with customers that include payment terms extending beyond one year are not significant.

Filtration: Within the Filtration segment, approximately 50% of revenues (approximately 20% of consolidated revenues) are recognized at a point in time when products are shipped (when control of the goods transfers) to unaffiliated customers. The related contracts are with commercial and military customers and have a single performance obligation as there is only one good promised or the promise to transfer the goods or services is not distinct or separately identifiable from other promises in the contract. The transaction price for these contracts reflects our estimate of returns, rebates and discounts, which are based on historical, current and forecasted information to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. Amounts billed to customers for shipping and handling are included in the transaction price as the related activities are performed prior to customer obtaining control of the products. They generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer and are expensed in selling, general, and other costs in the period they are incurred. Taxes collected from customers and remitted to government authorities are recorded on a net basis. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.

Approximately 50% of the segment’s revenues (approximately 20% of consolidated revenues) are accounted for over time as the product does not have an alternative use and the Company has an enforceable right to payment for costs incurred plus a reasonable margin or the inventory is owned by the customer. The related contracts are primarily cost-plus or fixed price contracts related to the design, development and manufacture of complex fluid control products, quiet valves, manifolds, shock and vibration dampening, thermal insulation and systems primarily for the commercial aerospace and military (U.S. Government) markets. The contracts may contain multiple products, which are capable of being distinct as the customer could benefit from each product on its own or together with other readily available resources. Each product is separately identifiable from the other products in the contract. Therefore, each product is distinct in context of the contract and will be accounted for as a separate performance obligation. Our contracts are frequently modified for changes in contract specifications and requirements. Most of our contract modifications are for products that are not distinct from the existing contract and are accounted for as part of that existing contract.

Contracts with the U.S. Government generally contain clauses that provide lien rights to work-in-process along with clauses that allow the customer to unilaterally terminate the contract for convenience, pay us for costs incurred plus a reasonable profit and take control of any work-in-process. Due to the continuous transfer of control to the U.S. Government, we recognize revenue over the time that we perform under the contract.

Selecting the method to measure progress towards completion for the commercial and military contracts requires judgment and is based on the nature of the products or service to be provided. We generally use the cost-to-cost method to measure progress for our Filtration segment contracts, as the rate at which costs are incurred to fulfill a contract best depicts the transfer of control to the customer. Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred based on an estimated profit margin.

The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable. Certain of our long-term contracts contain incentive fees that can increase the transaction price. These variable amounts generally are awarded upon achievement of certain performance metrics, program milestones or cost targets and can be based upon customer discretion. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all other information that is reasonably available to us.

Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several months to one or more years, and the estimation of these costs requires judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change.

Under the typical payment terms of our long term fixed price contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of costs incurred as the work progresses. Because of the timing difference of revenue recognition and customer billing, these contracts will often result in revenue recognized in excess of billings and billings in excess of costs incurred, which we present as contract assets and contract liabilities, respectively, in the Consolidated Balance Sheets. Amounts billed and due from our customers are classified in Accounts receivable, net. For short term fixed price and cost-type contracts, we are generally paid within a short period of time.

For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. We have net revenue recognized in the current year from performance obligations satisfied in the prior year due to changes in our estimated costs to complete the related performance obligations. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

USG: Within the USG segment, approximately 75% of revenues (approximately 19% of consolidated revenues) are recognized at a point in time when products are shipped (when control of the goods transfers) to unaffiliated customers. The related contracts are with commercial customers. The contracts may contain multiple products which are capable of being distinct as the customer could benefit from each product on its own or together with other readily available resources. Each product is separately identifiable from the other products in the contract. Therefore, each product is distinct in context of the contract and is accounted for as a separate performance obligation. The transaction price for these contracts reflects our estimate of variable consideration in the form of returns, rebates and discounts, which are based on historical, current and forecasted information to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. Amounts billed to customers for shipping and handling are included in the transaction price as the related activities are performed prior to customer obtaining control of the products. They generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer and are expensed in selling, general, and other costs in the period they are incurred. Taxes collected from customers and remitted to government authorities are recorded on a net basis. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.

Approximately 25% of the segment’s revenues (approximately 7% of consolidated revenues) are recognized over time as services are performed. The services accounted for under this method include an obligation to provide testing services using hardware and embedded software, software maintenance, training, lab testing, and consulting services. The related contracts contain a bundle of goods and services that are integrated in the context of the contract. Therefore, the goods and services are not distinct and the Company has a single performance obligation. Selecting the method to measure progress towards completion for these contracts requires judgment and is based on the nature of the products and service to be provided. We will recognize revenue as a series of distinct services based on each day of providing services (straight-line over the contract term) for our USG segment contracts. The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable. Under the typical payment terms of our service contracts, the customer pays us in advance of when services are performed. Because of the timing difference of revenue recognition and customer payment, which is typically received upon commencement of the contract, these contracts result in deferred revenue, which we present as contract liabilities, in the Consolidated Balance Sheets.

Included in this category, approximately 10% of the segment’s revenues (approximately 2% of consolidated revenues) are recognized based on the terms of the software contract. For contracts that transfer a software license to the customer, revenue will be recognized at a point in time. These type of software contracts represent a right to use the software, or a functional license, in which revenue should be recognized upon transfer of the license. For contracts in software as a service (SaaS) arrangements, revenue will be recognized over time. The customer receives and consumes the benefits of the SaaS arrangement through access to the system which is for a stated period. We will recognize revenue based on each day of providing access (straight-line over the contract term). The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable. Under the typical payment terms of our software contracts, the customer pays us in advance of when services are performed. Because of the timing difference of revenue recognition and customer payment, these contracts result in deferred revenue, which we present as contract liabilities, in the Consolidated Balance Sheets.

Test: Within the Test segment, approximately 20% of revenues (approximately 4% of consolidated revenues) are recognized at a point in time when products such as, antennas and probes are shipped (when control of the goods transfers) to unaffiliated customers. The related contracts are with commercial customers. The contracts may contain multiple products which are capable of being distinct as the customer could benefit from each product on its own or together with other readily available resources. Each product is separately identifiable from the other products in the contract. Therefore, each product is distinct in context of the contract and will be accounted for as a separate performance obligation. The transaction price for these contracts reflects our estimate of variable consideration in the form of returns, rebates and discounts, which are based on historical, current and forecasted information to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant. Amounts billed to customers for shipping and handling are included in the transaction price as the related activities are performed prior to customer obtaining control of the products. They generally are not treated as separate performance obligations as these costs fulfill a promise to transfer the product to the customer and are expensed in selling, general, and other costs in the period they are incurred. Taxes collected from customers and remitted to government authorities are recorded on a net basis. We primarily provide standard warranty programs for products in our commercial businesses for periods that typically range from one to two years. These assurance-type programs typically cannot be purchased separately and do not meet the criteria to be considered a performance obligation.

Approximately 80% of the segment’s revenues (approximately 19% of consolidated revenues) are recorded over time as the product does not have an alternative use and the Company has an enforceable right to payment for costs incurred plus a reasonable margin. Products accounted for under this guidance include the construction and installation of test chambers to a buyer’s specifications that provide its customers with the ability to measure and contain magnetic, electromagnetic and acoustic energy. The goods and services related to each installed test chamber are not distinct due to the significant amount of integration provided and each installed chamber is accounted for as a single performance obligation. Selecting the method to measure progress towards completion for these contracts requires judgment and is based on the nature of the products and service to be provided. We use milestones to measure progress for our Test segment contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. For arrangements that are accounted for under this guidance, the Company estimates profit as the difference between total revenue and total estimated cost of a contract and recognizes these revenues and costs based primarily on contract milestones. The transaction price for our contracts represents our best estimate of the consideration we will receive and includes assumptions regarding variable consideration as applicable.

Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several months to a year, and the estimation of these costs requires judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change.

Under the typical payment terms of our fixed price contracts, the customer pays us either performance-based or progress payments. Performance-based payments represent interim payments based on quantifiable measures of performance or on the achievement of specified events or milestones. Progress payments are interim payments of costs incurred as the work progresses. Because of the timing difference of revenue recognition and customer billing, these contracts result in revenue recognized in excess of billings and billings in excess of costs incurred, which we present as contract assets and contract liabilities, respectively, in the Consolidated Balance Sheets. Amounts billed and due from our customers are classified in Accounts receivable, net.

performance obligations. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

Technical Packaging: Within the Technical Packaging segment, 100% of the revenues (approximately 11% of consolidated revenues) are recognized over time as the product does not have an alternative use and the Company has an enforceable right to payment. Selecting the method to measure progress towards completion for the contracts requires judgment and is based on the nature of the products to be provided. We use the cost-to-cost method to measure progress for our Technical Packaging segment contracts because it best depicts the transfer of control to the customer that occurs as we incur costs on our contracts. Under this measure, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the estimated costs at completion of the performance obligation, and revenue is recorded proportionally as costs are incurred. The transaction price for our contracts reflects our estimate of variable consideration in the form of returns, rebates and discounts, which are based on historical, current and forecasted information to determine the expected amount to which the Company will be entitled in exchange for transferring the promised goods or services to the customer. The realization of variable consideration occurs within a short period of time from product delivery; therefore, the time value of money effect is not significant.

Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of weeks, minimizing the amount of judgment in developing the cost estimate. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change.

Under the typical payment terms of our contracts, the customer is billed upon shipment of product. Amounts billed and due from our customers are classified in Accounts receivable, net. Because of the timing difference of revenue recognition and customer billing, these contracts result in revenue recognized in excess of billings, which we present as contract assets in the Consolidated Balance Sheets.

For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

Contract Assets and Liabilities

Contract assets arise from contracts when revenue is recognized over time and the amount of revenue recognized, including our estimate of variable consideration that has been included in the transaction price, exceeds the amount billed to the customer. These amounts are included in contract assets until the right to payment is no longer conditional on events other than the passage of time. These contract assets are reclassified to receivables when the right to consideration becomes unconditional. Contract liabilities include deposits, deferred revenue, upfront payments and billings in excess of revenue recognized. Liabilities for customer rebates and discounts are included in other current liabilities in the accompanying balance sheet.

See the further discussion of the Company’s revenue recognition in Note 16 below.

Prior to Adoption of ASC 606

Prior to October 1, 2018, Management recognized revenue consistent with ASC 605. The Filtration and Technical Packaging segments were most impacted by the change in the timing of revenue recognition. Under ASC 605, the Filtration segment recognized 85% and 86% of revenues upon delivery of products (when title and risk of ownership transfers) and when the other general conditions to revenue recognition (collectability of revenues is probable, there is evidence of an arrangement, fees are fixed and determinable) are met, and 15% and 14% of revenues under percentage-of-completion in 2018 and 2017, respectively. Under ASC 605, the Technical Packaging segment recognized 100% of revenues upon delivery of products (when title and risk of ownership transfers) in 2018 and 2017. The change to recording more revenue over time as costs are incurred at both segments is the result of the products not having an alternative use and the Company having an enforceable right to payment for costs incurred plus a reasonable margin or the inventory is owned by the customer.

The timing of revenue recognition under ASC 605 and ASC 606 was similar for the USG and Test segments. Within the USG segment, 25% and 22% of revenues were recognized under percentage-of-completion and 75% and 78% of revenues were recognized when products were delivered or services performed (when title and risk of ownership transfers) and when the other general conditions to revenue recognition (collectability of revenues is probable, there is evidence of an arrangement, fees are fixed and

determinable) are met) in 2018 and 2017, respectively. Within the Test segment, 75% and 70% of revenues were recognized under percentage-of-completion and 25% and 30% of revenues were recognized when products were delivered or services performed (when title and risk of ownership transfers) in 2018 and 2017, respectively.

F. Cash and Cash Equivalents

Cash equivalents include temporary investments that are readily convertible into cash, such as money market funds, with original maturities of three months or less.

G. Accounts Receivable

Accounts receivable have been reduced by an allowance for amounts that the Company estimates are uncollectible in the future. This estimated allowance is based on Management’s evaluation of the financial condition of the customer and historical write-off experience.

H. Inventories

Inventories are valued at the lower of cost (first-in, first-out) or market value. Inventories are regularly reviewed for excess quantities and obsolescence based upon historical experience, specific identification of discontinued items, future demand, and market conditions. Inventories under long-term contracts reflect accumulated production costs, factory overhead, initial tooling and other related costs less the portion of such costs charged to cost of sales.

I. Property, Plant and Equipment

Property, plant and equipment are recorded at cost. Depreciation and amortization are computed primarily on a straight-line basis over the estimated useful lives of the assets: buildings, 10-40 years; machinery and equipment, 3-10 years; and office furniture and equipment, 3-10 years. Leasehold improvements are amortized over the remaining term of the applicable lease or their estimated useful lives, whichever is shorter. Long-lived tangible assets are reviewed for impairment whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. Impairment losses are recognized based on fair value.

J. Leases

Lease agreements are evaluated to determine whether they are capital or operating leases in accordance with ASC 840, Leases (ASC 840). When any one of the four test criteria in ASC 840 is met, the lease then qualifies as a capital lease. Capital leases are capitalized at the lower of the net present value of the total amount payable under the leasing agreement (excluding finance charges) or the fair market value of the leased asset. Capital lease assets are depreciated on a straight-line basis, over a period consistent with the Company’s normal depreciation policy for tangible fixed assets. The Company allocates each lease payment between a reduction of the lease obligation and interest expense using the effective interest method. Rent expense for operating leases, which may include free rent or fixed escalation amounts in addition to minimum lease payments, is recognized on a straight-line basis over the duration of the lease term. Capital lease obligations are included within other long-term liabilities (long-term portion) and accrued other expenses (current portion).

K. Goodwill and Other Long-Lived Assets

Goodwill represents the excess of purchase price over the fair value of net identifiable assets acquired in business acquisitions. Management annually reviews goodwill and other long-lived assets with indefinite useful lives for impairment or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. If the Company determines that the carrying value of the long-lived asset may not be recoverable, a permanent impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value. Fair value is measured based on a discounted cash flow method using a discount rate determined by Management to be commensurate with the risk inherent in each of our reporting units' current business models. During 2019, the revenue softness in the Company’s renewable energy subsidiary NRG led management to perform a more comprehensive impairment analysis, which included a detailed calculation surrounding the carrying value of its $8 million of goodwill and $8 million of tradename related to that reporting unit. The results of these additional analyses indicated that our estimates of discounted cash flows for assets measured in accordance with ASC 350, Intangibles – Goodwill and Other would allow the carrying amounts to be recovered. Since we are using estimates of discounted cash flows, these may change, and if they change negatively it could result in the need to write down those assets to fair value.

Other intangible assets represent costs allocated to identifiable intangible assets, principally customer relationships, capitalized software, patents, trademarks, and technology rights. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and are reviewed for impairment whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. See Note 3 regarding goodwill and other intangible assets activity.

L. Capitalized Software

The costs incurred for the development of computer software that will be sold, leased, or otherwise marketed are charged to expense when incurred as research and development until technological feasibility has been established for the product. Technological feasibility is typically established upon completion of a detailed program design. Costs incurred after this point are capitalized on a project-by-project basis. Capitalized costs consist of internal and external development costs. Upon general release of the product to customers, the Company ceases capitalization and begins amortization, which is calculated on a project-by-project basis as the greater of (1) the ratio of current gross revenues for a product to the total of current and anticipated future gross revenues for the product or (2) the straight-line method over the estimated economic life of the product. The Company generally amortizes the software development costs over a three-to-seven year period based upon the estimated future economic life of the product. Factors considered in determining the estimated future economic life of the product include anticipated future revenues, and changes in software and hardware technologies. Management annually reviews the carrying values of capitalized costs for impairment or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. If expected cash flows are insufficient to recover the carrying amount of the asset, then an impairment loss is recognized to state the asset at its net realizable value.

M. Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets may be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company regularly reviews its deferred tax assets for recoverability and establishes a valuation allowance when Management believes it is more likely than not such assets will not be recovered, taking into consideration historical operating results, expectations of future earnings, tax planning strategies, and the expected timing of the reversals of existing temporary differences.

N. Research and Development Costs

Company-sponsored research and development costs include research and development and bid and proposal efforts related to the Company’s products and services. Company-sponsored product development costs are charged to expense when incurred. Customer-sponsored research and development costs incurred pursuant to contracts are accounted for similarly to other program costs. Customer-sponsored research and development costs refer to certain situations whereby customers provide funding to support specific contractually defined research and development costs. Total Company and customer-sponsored research and development expenses were approximately $14.5 million, $13.1 million and $14.0 million for 2019, 2018 and 2017, respectively. These expense amounts exclude certain engineering costs primarily associated with product line extensions, modifications and maintenance, which amounted to approximately $15.8 million, $13.1 million and $10.4 million for 2019, 2018 and 2017, respectively.

O. Foreign Currency Translation

The financial statements of the Company’s foreign operations are translated into U.S. dollars in accordance with FASB ASC Topic 830, Foreign Currency Matters. The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive income.

P. Earnings Per Share

Basic earnings per share is calculated using the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated using the weighted average number of common shares outstanding during the period plus shares issuable upon the assumed exercise of dilutive common share options and vesting of performance-accelerated restricted shares using the treasury stock method. There are no anti-dilutive shares.

The number of shares used in the calculation of earnings per share for each year presented is as follows:


(in thousands)	2019	2018	2017
Weighted Average Shares Outstanding — Basic	25,946	25,874	25,774
Performance- Accelerated Restricted Stock	151	184	221
Shares — Diluted	26,097	26,058	25,995

Q. Share-Based Compensation

The Company provides compensation benefits to certain key employees under several share-based plans providing for employee stock options and/or performance-accelerated restricted shares (restricted shares), and to non-employee directors under a non-employee directors compensation plan. Share-based payment expense is measured at the grant date based on the fair value of the award and is recognized on a straight-line basis over the requisite service period (generally the vesting period of the award).

R. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss of $(44.0) million at September 30, 2019 consisted of $(37.0) million related to the pension actuarial loss; and $(7.0) million related to currency translation adjustments. Accumulated other comprehensive loss of $(31.5) million at September 30, 2018 consisted of $(30.9) million related to the pension net actuarial loss; $(0.5) million related to currency translation adjustments; and $(0.1) million related to forward exchange contracts.

S. Deferred Revenue and Costs

Deferred revenue and costs are recorded when products or services have been provided or cash has been received but the criteria for revenue recognition have not been met. If there is a customer acceptance provision or there is uncertainty about customer acceptance, revenue and costs are deferred until the customer has accepted the product or service.

T. Derivative Financial Instruments

All derivative financial instruments are reported on the balance sheet at fair value. The accounting for changes in fair value of a derivative instrument depends on whether it has been designated and qualifies as a hedge and on the type of hedge. For each derivative instrument designated as a cash flow hedge, the effective portion of the gain or loss on the derivative is deferred in accumulated other comprehensive income until recognized in earnings with the underlying hedged item. For each derivative instrument designated as a fair value hedge, the gain or loss on the derivative and the offsetting gain or loss on the hedged item are recognized immediately in earnings. Regardless of type, a fully effective hedge will result in no net earnings impact while the derivative is outstanding. To the extent that any hedge is ineffective at offsetting cash flow or fair value changes in the underlying hedged item, there could be a net earnings impact.

U. Fair Value Measurements

Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties or the amount that would be paid to transfer a liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of Management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.

The accounting guidance establishes a three-level hierarchy for disclosure of fair value measurements, based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 –Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Financial Assets and Liabilities

The Company has estimated the fair value of its financial instruments as of September 30, 2019 using available market information or other appropriate valuation methodologies. The carrying amounts of cash and cash equivalents, receivables, inventories, payables and other current assets and liabilities approximate fair value because of the short maturity of those instruments. The carrying amounts due under the revolving credit facility approximate fair value as the interest on outstanding borrowings is calculated at a spread over the London Interbank Offered Rate (LIBOR) or based on the prime rate, at the Company’s election.

Nonfinancial Assets and Liabilities

The Company’s nonfinancial assets such as property, plant and equipment, and other intangible assets are not measured at fair value on a recurring basis; however they are subject to fair value adjustments in certain circumstances, such as when there is evidence that an impairment may exist. No impairments were recorded during 2019.

V. New Accounting Standards

Leases

In February 2016, the FASB issued ASU No. 2016-062, "Leases" (ASU 2016-02) which supersedes ASC 840, "Leases" and creates a new topic, ASC 842, "Leases." Subsequent to the issuance of ASU 2016-02, ASC 842 was amended by various updates that amend and clarify the impact and implementation of the aforementioned update. These updates require lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. Upon initial application, the provisions of these updates are required to be applied using the modified retrospective method which requires retrospective adoption to each prior reporting period presented with the cumulative effect of adoption recorded to the earliest reporting period presented. An optional transition method can be utilized which requires retrospective adoption beginning on the date of adoption with the cumulative effect of initially applying these updates recognized at the date of initial adoption. These updates also expand the required quantitative and qualitative disclosures surrounding leases. These updates are effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years, with earlier application permitted. We adopted these updates on October 1, 2019 using the optional transition method. The adoption resulted in the addition of "right of use" assets and lease liabilities of approximately $25 million to our consolidated balance sheet, with no significant change to our consolidated statements of operations or cash flows. The updates will also have an impact on our accounting policies, internal controls and disclosures related to leases.

Other Standards

In January 2018, the FASB issued ASU No. 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which gives entities the option to reclassify to retained earnings the tax effects resulting from the Act related to items in accumulated other comprehensive income (loss) (AOCI) that the FASB refers to as having been stranded in AOCI. This new standard is effective for annual periods beginning after December 15, 2018. The Company adopted this ASU in the fourth quarter of 2018 and, as a result of adopting this standard, it reclassified $6.3 million from AOCI to retained earnings.

In January 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-04, Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates Step 2 from the goodwill impairment test. Under the amendments in this update, an entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The new standard is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment test performed on testing dates after January 1, 2017. The Company adopted this standard in the fourth quarter of 2017 with its annual goodwill impairment tests. The adoption of ASU 2017-04 did not have an impact on the Company’s consolidated financial statements.

Acquisitions

12 Months Ended

Sep. 30, 2019

Acquisitions

Acquisitions

2. Acquisitions

2019

On July 2, 2019 the Company acquired Globe Composite Solutions, LLC, for a purchase price of approximately $95 million, net of cash acquired. Globe, based in Stoughton, Massachusetts, is a well-established, vertically integrated supplier of mission-critical composite-based products and solutions for navy, defense, and industrial customers, Globe has annualized sales of approximately $37

million. Since the date of acquisition, the operating results for Globe have been included in the Company’s Filtration segment. Based on the preliminary purchase price allocation, the Company recorded approximately $3.5 million of accounts receivable, $3.5 million of inventory, $6.3 million of property, plant and equipment, $10.5 million of accounts payable, accrued expenses and advance payments, $28.5 million of goodwill, $3.7 million of tradenames and $59.7 million of amortizable intangible assets consisting mainly of $56.7 million of customer relationships with a weighted average life of 20 years and $2.8 million of customer contract assets. The final working capital adjustment is due in January 2020. The acquired goodwill relates to excess value associated with the opportunities to expand the services and markets that the Company can offer to its customers. The Company estimates approximately $25 million of the goodwill will be deductible for tax purposes.

2018

On March 14, 2018, the Company acquired the assets of Manta Test Systems Inc. (Manta), a North American utility solutions provider located in Mississauga, Ontario, Canada, for a purchase price of $9.5 million in cash. Since the date of acquisition, the operating results for Manta have been included as a product line of Doble within the Company’s USG segment. Based on the purchase price allocation, the Company recorded approximately $0.4 million of accounts receivable, $1.1 million of inventory, $0.2 million of property, plant and equipment, $0.4 million of accounts payable and accrued expenses, $3.5 million of goodwill, $1.2 million of tradenames and $3.5 million of amortizable intangible assets consisting of customer relationships with a weighted average life of 13 years.

2017

On August 30, 2017, the Company acquired the assets of Vanguard Instruments Company (Vanguard Instruments), a test equipment provider serving the global electric utility market, located in Ontario, California, for a purchase price of $36.0 million in cash. Since the date of acquisition, the operating results for Vanguard Instruments have been included as a product line of Doble within the Company’s USG segment. Based on the purchase price allocation, the Company recorded approximately $1.8 million of accounts receivable, $2.1 million of inventory, $0.3 million of property, plant and equipment, $0.2 million of accounts payable and accrued expenses, $10.7 million of goodwill, $3.2 million of tradenames and $18.0 million of amortizable intangible assets consisting of customer relationships with a weighted average life of 15 years.

On May 25, 2017, the Company acquired the assets of Morgan Schaffer Inc. (Morgan Schaffer), a global utilities provider located in Montreal, Quebec, Canada, for a purchase price of $48.8 million in cash. Since the date of acquisition, the operating results for Morgan Schaffer have been included in the Company’s USG segment. Based on the purchase price allocation, the Company recorded approximately $2.5 million of accounts receivable, $5.2 million of inventory, $1.7 million of property, plant and equipment, $0.4 million of other assets, $4.9 million of accounts payable and accrued expenses, $4.8 million of goodwill, $35.6 million of trade names and $3.6 million of amortizable intangible assets consisting of customer relationships and developed technology with a weighted average life of approximately 10 years.

On May 8, 2017, the Company acquired NRG Systems, Inc. (NRG), located in Hinesburg, Vermont, for a purchase price of $38.6 million in cash (net of cash acquired). NRG is a global market leader in the design and manufacture of decision support tools for the renewable energy industry, primarily wind. Since the date of acquisition, the operating results for NRG have been included in the Company’s USG segment. Based on the purchase price allocation, the Company recorded approximately $1.5 million of cash, $4.1 million of accounts receivable, $5.1 million of inventory, $0.4 million of other assets, $9.4 million of property, plant and equipment (including a capital lease), $4.3 million of accounts payable and accrued expenses, $8.9 million of long-term lease liability, $7.5 million of goodwill, $8.1 million of trade names and $17.2 million of amortizable intangible assets consisting of customer relationships with a weighted average life of approximately 14 years.

On November 7, 2016, the Company acquired aerospace suppliers Mayday Manufacturing Co. (Mayday) and its affiliate, Hi-Tech Metals, Inc. (Hi-Tech), which share a state-of-the-art, expandable 130,000 square foot facility in Denton, Texas, for a purchase price of approximately $75 million in cash. Since the date of acquisition, the consolidated operating results for Mayday and Hi-Tech have been included in the Company’s Filtration segment. Based on the purchase price allocation, the Company recorded approximately $7.4 million of accounts receivable, $11.0 million of inventory, $0.3 million of other assets, $16.6 million of property, plant and equipment (including a capital lease), $2.8 million of accounts payable and accrued expenses, $9.5 million of long-term lease liability, $15.7 million of deferred tax liabilities, $30.1 million of goodwill, $4.8 million of trade names and $32.8 million of amortizable identifiable intangible assets consisting primarily of customer relationships with a weighted-average life of approximately 20 years.

All of the Company’s acquisitions have been accounted for using the purchase method of accounting, and accordingly, the respective purchase prices were allocated to the assets (including intangible assets) acquired and liabilities assumed based on estimated fair

values at the date of acquisition. The financial results from these acquisitions have been included in the Company’s financial statements from the date of acquisition.

The goodwill recorded for the Mayday acquisition mentioned above is not expected to be deductible for U.S. Federal or state income tax purposes. The goodwill recorded for the Globe, Vanguard Instruments and NRG acquisitions mentioned above is expected to be deductible for U.S. Federal and state income tax purposes. The goodwill recorded for the Manta and Morgan Schaffer acquisitions is expected to be deductible for Canadian income tax purposes.

Goodwill and Other Intangible Assets

12 Months Ended

Sep. 30, 2019

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

3. Goodwill and Other Intangible Assets

Included on the Company’s Consolidated Balance Sheets at September 30, 2019 and 2018 are the following intangible assets gross carrying amounts and accumulated amortization:


(Dollars in millions)	2019		2018
Goodwill	$	409.2	381.7

Intangible assets with determinable lives:
Patents
Gross carrying amount	$	2.1	1.8
Less: accumulated amortization		0.9	0.8
Net	$	1.2	1.0

Capitalized software
Gross carrying amount	$	79.7	71.3
Less: accumulated amortization		49.2	41.6
Net	$	30.5	29.7

Customer Relationships
Gross carrying amount	$	241.3	185.3
Less: accumulated amortization		59.0	47.8
Net	$	182.3	137.5

Other
Gross carrying amount	$	5.3	5.5
Less: accumulated amortization		2.6	2.0
Net	$	2.7	3.5
Intangible assets with indefinite lives:
Trade names	$	176.3	173.7

The Company performed its annual evaluation of goodwill and intangible assets for impairment during the fourth quarter of 2019 and concluded no impairment existed at September 30, 2019 and there are no accumulated impairment losses as of September 30, 2019.

The changes in the carrying amount of goodwill attributable to each business segment for 2019 and 2018 are as follows:


(Dollars in millions)	Filtration		Test	USG	Technical Packaging	Total
Balance as of September 30, 2017	$	73.7	34.1	250.2	19.9	377.9
Acquisition activity		—	—	3.9	—	3.9
Foreign currency translation and other		—	—	—	(0.1)	(0.1)
Balance as of September 30, 2018		73.7	34.1	254.1	19.8	381.7
Acquisition activity		28.5	—	—	—	28.5
Foreign currency translation and other		—	—	(0.1)	(0.9)	(1.0)
Balance as of September 30, 2019	$	102.2	34.1	254.0	18.9	409.2

Amortization expense related to intangible assets with determinable lives was $19.5 million, $18.3 million and $16.3 million in 2019, 2018 and 2017, respectively. Patents are amortized over the life of the patents, generally 17 years. Capitalized software is amortized over the estimated useful life of the software, generally three to seven years. Customer relationships are generally amortized over

fifteen to twenty years. Intangible asset amortization for fiscal years 2020 through 2024 is estimated at approximately $22 million per year.

Income Tax Expense

12 Months Ended

Sep. 30, 2019

Income Tax Expense

Income Tax Expense

7. Income Tax Expense

The components of income before income taxes for 2019, 2018 and 2017 consisted of the following:


(Dollars in thousands)	2019		2018	2017
United States	$	93,654	80,994	72,353
Foreign		8,562	7,029	7,800
Total income before income taxes	$	102,216	88,023	80,153

The principal components of income tax expense (benefit) for 2019, 2018 and 2017 consist of:


(Dollars in thousands)	2019		2018	2017
Federal:
Current	$	14,097	9,174	21,448
Deferred		1,020	(22,943)	628
State and local:
Current		3,189	2,121	1,795
Deferred		204	2,972	(49)
Foreign:
Current		2,493	2,233	4,450
Deferred		174	2,330	(1,822)
Total	$	21,177	(4,113)	26,450

The actual income tax expense (benefit) for 2019, 2018 and 2017 differs from the expected tax expense for those years (computed by applying the U.S. Federal corporate statutory rate) as follows:


	2019		2018		2017
Federal corporate statutory rate	21.0	%	24.5	%	35.0	%
State and local, net of Federal benefits	3.3		3.0		2.4
Foreign	0.7		0.6		(0.1)
Research credit	(0.9)		(1.6)		(1.1)
Domestic production deduction	—		(1.1)		(2.7)
Change in uncertain tax positions	(0.1)		(0.1)		—
Executive compensation	0.3		(0.1)		(0.1)
Valuation allowance	(2.4)		3.0		(0.3)
GILTI and FDII	(0.8)		—		—
Tax reform – impact on U.S. deferred tax assets and liabilities	(0.3)		(37.2)		—
Tax reform – transition tax	(0.1)		1.5		—
Tax reform – taxes related to foreign unremitted earnings	—		2.8		—
Other, net	—		—		(0.1)
Effective income tax rate	20.7	%	(4.7)	%	33.0	%

On December 22, 2017, President Trump signed into law new tax legislation commonly referred to as the Tax Cut and Jobs Act (the “TCJA”). Provisions under the TCJA that became effective for the Company in the current fiscal year include a further reduction in the U.S. statutory rate to 21%, a new minimum tax on global intangible low-taxed income (“GILTI”), the benefit of the deduction for foreign-derived intangible income ("FDII"), and changes to IRC Section 162(m) related to the deductibility of executive compensation.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at September 30, 2019 and 2018 are presented below:


(Dollars in thousands)	2019		2018
Deferred tax assets:
Inventories	$	5,089	5,834
Pension and other postretirement benefits		5,533	3,969
Net operating and capital loss carryforwards — domestic		617	639
Net operating loss carryforward — foreign		3,766	4,603
Foreign tax credit carryforward		—	2,377
Other compensation-related costs and other cost accruals		7,952	7,048
State credit carryforward		1,914	2,103
Total deferred tax assets		24,871	26,573

Deferred tax liabilities:
Timing differences related to revenue recognition		(1,508)	—
Goodwill		(2,673)	(969)
Acquisition assets		(60,224)	(62,841)
Depreciation, software amortization		(20,161)	(19,584)
Net deferred tax liabilities before valuation allowance		(59,695)	(56,821)
Less valuation allowance		(4,520)	(7,144)
Net deferred tax liabilities	$	(64,215)	(63,965)

The Company has a foreign net operating loss (NOL) carryforward of $16.6 million at September 30, 2019, which reflects tax loss carryforwards in Germany, Finland, South Africa, Japan, Canada, Norway and the United Kingdom. Approximately $16.0 million of the tax loss carryforwards have no expiration date while the remaining $0.6 million will expire between 2027 and 2039. The Company has deferred tax assets related to state NOL carryforwards of $0.6 million at September 30, 2019 which expire between 2027 and 2039. The Company also has net state research and other credit carryforwards of $1.9 million of which $1.4 million expires between 2025 and 2037. The remaining $0.5 million does not have an expiration date.

The valuation allowance for deferred tax assets as of September 30, 2019 and 2018 was $4.5 million and $7.1 million, respectively. The net change in the total valuation allowance for each of the years ended September 30, 2019 and 2018 was a decrease of $2.6 million and an increase of $2.7 million, respectively. The Company has established a valuation allowance for excess foreign tax credits that are not expected to be utilized in future periods of $0 and $2.4 million at September 30, 2019 and 2018, respectively. The Company has established a valuation allowance against state credit carryforwards of $0.4 million at both September 30, 2019 and 2018. In addition, the Company has established a valuation allowance against state NOL carryforwards that are not expected to be realized in future periods of $0.6 million at both September 30, 2019 and 2018. Lastly, the Company has established a valuation allowance against certain NOL carryforwards in foreign jurisdictions which may not be realized in future periods of $3.6 million and $3.8 million at September 30, 2019 and 2018, respectively.

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act, which made comprehensive changes to U.S. federal income tax laws by moving from a global to a modified territorial tax regime. As a result, cash repatriated to the U.S. is generally no longer subject to U.S. federal income tax. No provision is made for foreign withholding any applicable U.S. income taxes on the undistributed earnings of non-U.S. where these earnings are considered indefinitely invested or otherwise retained for continuing international operations. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted is not practicable.

The Company had $0 and $0.1 million of unrecognized tax benefits as of September 30, 2019 and 2018, respectively, which, if recognized, would affect the Company’s effective tax rate. The Company’s policy is to include interest related to unrecognized tax benefits in income tax expense and penalties in operating expense. As of September 30, 2019, 2018 and 2017, the Company had zero accrued interest related to uncertain tax positions on its Consolidated Balance Sheets. No penalties have been accrued.

The principal jurisdictions for which the Company files income tax returns are U.S. Federal and the various city, state, and international locations where the Company has operations. The U.S. Federal tax years for the periods ended September 30, 2016 and forward remain subject to income tax examination. Various state tax years for the periods ended September 30, 2015 and forward remain subject to income tax examinations. The Company is subject to income tax in many jurisdictions outside the United States, none of which is individually significant.

Debt

12 Months Ended

Sep. 30, 2019

Debt

Debt

8. Debt

Debt consists of the following at September 30, 2019 and 2018:


(Dollars in thousands)	2019		2018
Revolving credit facility, including current portion	$	286,261	220,000
Current portion of long-term debt		(21,261)	(20,000)
Total long-term debt, less current portion	$	265,000	200,000

On September 27, 2019, the Company entered into a new five-year credit facility (“the Credit Facility"), modifying its previous credit facility which would have matured December 21, 2020. The Credit Facility includes a $500 million revolving line of credit as well as provisions allowing for the increase of the credit facility commitment amount by an additional $250 million, if necessary, with the consent of the lenders. The bank syndication supporting the facility is comprised of a diverse group of eight banks led by JP Morgan Chase Bank, N.A., as Administrative Agent. The Credit Facility matures September 27, 2024.

Interest on borrowings under the Credit Facility is calculated at a spread over either the London Interbank Offered Rate (LIBOR), the New York Federal Reserve Bank Rate or the prime rate, depending on various factors. The Credit Facility also requires a facility fee ranging from 10 to 25 basis points per annum on the unused portion. The interest rate spreads and the facility fee are subject to increase or decrease depending on the Company's leverage ratio.

The Credit Facility is secured by the unlimited guaranty of the Company's direct and indirect material U.S. subsidiaries and the pledge of 100% of the equity interests of its direct and indirect material foreign subsidiaries. The financial covenants of the Credit Facility include a leverage ratio and an interest coverage ratio. As of September 30, 2019, the Company was in compliance with all covenants.

At September 30, 2019, the Company had approximately $207 million available to borrow under the Credit Facility, plus the $250 million increase option, in addition to $61.8 million cash on hand. The Company classified $21.3 million as the current portion of long-term debt as of September 30, 2019, as the Company intends to repay this amount within the next twelve months; however, the Company has no contractual obligation to repay such amount during the next twelve months.

During 2019 and 2018, the maximum aggregate short-term borrowings at any month-end were $308 million and $271 million, respectively, and the average aggregate short-term borrowings outstanding based on month-end balances were $236.4 million and $258.8 million, respectively. The weighted average interest rates were 3.21%, 3.03% and 2.09% for 2019, 2018 and 2017, respectively. The letters of credit issued and outstanding under the Credit Facility totaled $8.2 million and $7.8 million at September 30, 2019 and 2018, respectively.

Share-Based Compensation

12 Months Ended

Sep. 30, 2019

Share-Based Compensation

Share-Based Compensation

10. Share-Based Compensation

The Company provides compensation benefits to certain key employees under several share-based plans providing for performance-accelerated restricted share unit (PARS) awards, and to non-employee directors under a non-employee directors compensation plan. The Company has no stock options currently outstanding. As of September 30, 2019, the Company's equity compensation plans had a total of 844,029 shares authorized and available for future issuance.

Performance-Accelerated Restricted Share Unit (PARS) Awards

A PARS award represents the right to receive a specified number of shares of Company common stock if and when the award vests. A PARS award is not stock and does not give the recipient any rights as a shareholder until it vests and is paid out in shares of stock. PARS awards currently outstanding have a five-year vesting period, with accelerated vesting if certain targets based on market conditions are achieved. In these cases, if it is probable that the performance condition will be met, the Company recognizes compensation cost on a straight-line basis over the shorter performance period; otherwise, it will recognize compensation cost over the longer service period. Compensation cost for the outstanding PARS awards is being recognized over the shorter performance period, as it is probable the performance condition will be met. The PARS award grants were valued at the stock price on the date of grant. Pretax compensation expense related to the PARS awards for continuing operations was $4.3 million, $4.1 million and $4.4 million for 2019, 2018 and 2017, respectively.

The following summary presents information regarding outstanding PARS awards as of the specified dates, and changes during the specified periods:


	FY 2019			FY 2018			FY 2017
		Estimated			Estimated			Estimated
		Weighted			Weighted			Weighted
	Shares	Avg. Price		Shares	Avg. Price		Shares	Avg. Price
Nonvested at October 1,	315,544	$	47.23	335,825	$	40.35	427,438	$	35.40
Granted	84,862		74.77	104,320		56.06	110,422		51.16
Vested	(113,402)		37.00	(121,301)		35.59	(202,035)		35.78
Cancelled	(6,000)		45.20	(3,300)		53.86	—		—
Nonvested at September 30,	281,004	$	59.72	315,544	$	47.23	335,825	$	40.35

Compensation Plan for Non-Employee Directors

Through the first quarter of 2018 the Company's Compensation Plan for Non-Employee Directors provided to each non-employee director a retainer of 900 common shares per quarter. Beginning in the second quarter of 2018, the quarterly retainer was replaced by an annual retainer of Company stock having a grant date market value of $180,000. Non-employee director grants were valued at the NYSE closing price of the Company’s stock on the date of grant and were issued from the Company’s treasury stock. Compensation expense related to the non-employee director grants was $1.1 million, $1.1 million and $1.0 million for 2019, 2018 and 2017, respectively.

Total Share-Based Compensation

The total share-based compensation cost that has been recognized in results of operations and included within SG&A from continuing operations was $5.4 million, $5.2 million and $5.4 million for 2019, 2018 and 2017, respectively. The total income tax benefit recognized in results of operations for share-based compensation arrangements was $1.1 million, $1.3 million and $1.8 million for 2019, 2018 and 2017, respectively. As of September 30, 2019, there was $9.6 million of total unrecognized compensation cost related to share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of 2.0 years.

Retirement and Other Benefit Plans

12 Months Ended

Sep. 30, 2019

Retirement and Other Benefit Plans

Retirement and Other Benefit Plans

11. Retirement and Other Benefit Plans

Formerly, substantially all domestic employees were covered by a defined benefit pension plan maintained by the Company. Effective December 31, 2003, the Company’s defined benefit plan was frozen and no additional benefits have been accrued after that date. As a result, the accumulated benefit obligation and projected benefit obligation are equal. These frozen retirement income benefits are provided to employees under defined benefit pay-related and flat-dollar plans, which are noncontributory. The annual contributions to the defined benefit retirement plan equal or exceed the minimum funding requirements of the Employee Retirement Income Security Act. Subsequent to September 30, 2019, the Company announced that it plans to terminate and annuitize the defined benefit pension plan during fiscal 2020. In addition to providing retirement income benefits, the Company provides unfunded postretirement health and life insurance benefits to certain retirees. To qualify, an employee must retire at age 55 or later and the employee’s age plus service must equal or exceed 75. Retiree contributions are defined as a percentage of medical premiums. Consequently, retiree contributions increase with increases in the medical premiums. The life insurance plans are noncontributory and provide coverage of a flat dollar amount for qualifying retired employees. Effective December 31, 2004, no new retirees were eligible for life insurance benefits. In addition, substantially all domestic employees are covered by a defined contribution plan maintained by the Company.

The Company uses a measurement date of September 30 for its pension and other postretirement benefit plans. The Company has an accrued benefit liability of $0.6 million and $0.5 million at September 30, 2019 and 2018, respectively, related to its other postretirement benefit obligations. All other information related to its postretirement benefit plans is not considered material to the Company’s results of operations or financial condition.

The following tables provide a reconciliation of the changes in the pension plans and fair value of assets over the two-year period ended September 30, 2019, and a statement of the funded status as of September 30, 2019 and 2018:


(Dollars in millions)
Reconciliation of benefit obligation	2019		2018
Net benefit obligation at beginning of year	$	89.8	95.3
Interest cost		3.7	3.4
Actuarial loss (gain)		11.3	(4.3)
Gross benefits paid		(4.7)	(4.6)
Settlements		—	—
Net benefit obligation at end of year	$	100.1	89.8


(Dollars in millions)
Reconciliation of fair value of plan assets	2019		2018
Fair value of plan assets at beginning of year	$	73.3	65.0
Actual return on plan assets		5.9	2.7
Employer contributions		2.7	10.2
Gross benefits paid		(4.7)	(4.6)
Settlements		—	—
Fair value of plan assets at end of year	$	77.2	73.3


(Dollars in millions)
Funded Status	2019		2018
Funded status at end of year	$	(22.9)	(16.5)
Accrued benefit cost		(22.9)	(16.5)

Amounts recognized in the Balance Sheet consist of:
Current liability		(0.2)	(0.2)
Noncurrent liability		(22.7)	(16.3)
Accumulated other comprehensive (income)/loss (before tax effect)		49.6	41.9

Amounts recognized in accumulated other comprehensive (income)/loss consist of:
Net actuarial loss		49.6	41.9

Accumulated other comprehensive (income)/loss (before tax effect)	$	49.6	41.9

The estimated amount that will be amortized from accumulated other comprehensive (income) loss into net periodic benefit cost (income) in 2020 is $2.7 million.

The following table provides the components of net periodic benefit cost for the plans for 2019, 2018 and 2017:


(Dollars in millions)	2019		2018	2017
Service cost	$	—	—	—
Interest cost		3.7	3.4	3.2
Expected return on plan assets		(4.4)	(3.8)	(3.9)
Net actuarial loss		2.1	2.3	2.6
Net periodic benefit cost		1.4	1.9	1.9
Defined contribution plans		7.3	7.1	6.3
Total	$	8.7	9.0	8.2

The discount rate used in measuring the Company’s pension obligations was developed by matching yields of actual high-quality corporate bonds to expected future pension plan cash flows (benefit payments). Over 400 Aa-rated, non-callable bonds with a wide range of maturities were used in the analysis. After using the bond yields to determine the present value of the plan cash flows, a single representative rate that resulted in the same present value was developed. The expected long-term rate of return on plan assets assumption was determined by reviewing the actual investment return of the plans since inception and evaluating those returns in relation to expectations of various investment organizations to determine whether long-term future returns are expected to differ significantly from the past.

The following weighted-average assumptions were used to determine the net periodic benefit cost for the pension plans:


	2019		2018		2017
Discount rate	4.15	%	3.65	%	3.25	%
Rate of increase in compensation levels	N/A		N/A		N/A
Expected long-term rate of return on assets	6.00	%	6.00	%	6.25	%

The following weighted-average assumptions were used to determine the net periodic benefit obligations for the pension plans:


	2019		2018
Discount rate	3.05	%	4.15	%
Rate of increase in compensation levels	N/A		N/A

The assumed rate of increase in compensation levels is not applicable in 2019, 2018 and 2017 as the plan was frozen in earlier years.

The asset allocation for the Company’s pension plans at the end of 2019 and 2018, and the Company’s acceptable range and the target allocation for 2020, by asset category, are as follows:


	Target				Percentage of Plan Assets at
	Allocation		Acceptable		Year-end
Asset Category	2020		Range		2019		2018
Return seeking	53	%	48%-58	%	41	%	44	%
Liability hedging	47	%	42%-52	%	56	%	54	%
Cash/cash equivalents	0	%	0%-10	%	3	%	2	%

The Company’s pension plan assets are managed by outside investment managers and assets are rebalanced when the target ranges are exceeded. Pension plan assets consist principally of funds which invest in marketable securities including common stocks, bonds, and interest-bearing deposits. The Company’s investment strategy with respect to pension assets is to achieve a total rate of return (income and capital appreciation) that is sufficient to accomplish the purpose of providing retirement benefits to all eligible and future retirees of the pension plan. The Company regularly monitors performance and compliance with investment guidelines.

Fair Value of Financial Measurements

The fair values of the Company’s defined benefit plan investments as of September 30, 2019 and 2018, by asset category, were as follows:


(Dollars in millions)	2019		2018
Investments at fair value:
Cash and cash equivalents	$	2.1	2.1
Common and preferred stock funds:
Domestic large capitalization		8.8	8.7
Domestic small-/mid-capitalization		2.4	2.7
International funds		10.6	10.8
Fixed income funds		49.7	45.6
Real estate investment funds		3.6	3.4
Total investments at fair value	$	77.2	73.3

The following methods were used to estimate the fair value of each class of financial instrument:

Cash and cash equivalents: The carrying value of cash represents fair value as it consists of actual currency.

Investment Funds: The fair value of the investment funds, which offer daily redemptions, is determined based on the published net asset value of the funds as a practical expedient for fair value.

As of September 30, 2019, the fair values of the investments were classified within the valuation hierarchy under ASC 825 as follows: $44.9 million within Level 0, $13.0 million within Level 1 and $19.3 million within Level 2.

Expected Cash Flows

Information about the expected cash flows for the pension and other postretirement benefit plans follows:


	Pension		Other
(Dollars in millions)	Benefits		Benefits
Expected Employer Contributions — 2020	$	0.7	0.1
Expected Benefit Payments:
2020		5.8	0.1
2021		5.5	0.1
2022		5.7	0.1
2023		5.8	0.1
2024		5.9	0.1
2025‑2029	$	30.2	0.2

Derivative Financial Instruments

12 Months Ended

Sep. 30, 2019

Derivative Financial Instruments

Derivative Financial Instruments

12. Derivative Financial Instruments

Market risks relating to the Company’s operations result primarily from changes in interest rates and changes in foreign currency exchange rates. The Company is exposed to market risk related to changes in interest rates and selectively uses derivative financial instruments, including forward contracts and swaps, to manage these risks. In 2018, the Company entered into three interest rate swaps with a notional amount of $150 million to hedge its exposure to variability in future LIBOR-based interest payments on variable rate debt. In addition, the Company’s Canadian subsidiary Morgan Schaffer enters into foreign exchange contracts to manage foreign currency risk as a portion of their revenue is denominated in U.S. dollars. The Company expects hedging gains or losses to be essentially offset by losses or gains on the related underlying exposures. The amounts ultimately recognized may differ for open positions, which remain subject to ongoing market price fluctuations until settlement. All derivative instruments are reported in either accrued expenses or other assets on the balance sheet at fair value. For derivative instruments designated as cash flow hedges, the gain or loss on the derivative is deferred in accumulated other comprehensive income until recognized in earnings with the underlying hedged item. The interest rate swaps entered into during 2018 were not designated as cash flow hedges and, therefore, the gain or loss on the derivative is reflected in earnings each period. The following is a summary of the notional transaction amounts and fair values for the Company’s outstanding derivative financial instruments as of September 30, 2019.


	Notional Amount		Fair Value
(In thousands)	(Currency)		(US$)	Fix Rate
Forward contracts	5,750	USD	(35)
Interest rate swap	150,000	USD	(19)	2.09	%
Interest rate swap *	150,000	USD	(1,143)	2.24	%

* This swap represents a forward contract and will be effective in November 2019.

Fair Value of Financial Instruments

The Company’s forward contracts are classified within Level 2 of the valuation hierarchy in accordance with ASC 825, as presented below as of September 30, 2019:


(In thousands)	Level 1		Level 2	Level 3	Total
Asset:
Forward contracts	$	—	(1,197)	—	(1,197)

Valuation was based on third party evidence of similarly priced derivative instruments. There are no master netting arrangements with financial parties.

Business Segment Information

12 Months Ended

Sep. 30, 2019

Business Segment Information

Business Segment Information

13. Business Segment Information

The Company is organized based on the products and services it offers, and classifies its business operations in four reportable segments for financial reporting purposes: Filtration/Fluid Flow (Filtration), Utility Solutions Group (USG), RF Shielding and Test (Test) and Technical Packaging.

The Filtration segment’s operations consist of PTI Technologies Inc. (PTI), VACCO Industries (VACCO), Crissair, Inc. (Crissair), Mayday Manufacturing Co. (Mayday), Hi-Tech Metals, Inc. (Hi-Tech), Westland Technologies, Inc. (Westland), and Globe Composite Solutions, LLC (Globe). PTI, VACCO and Crissair design and manufacture specialty filtration products, including hydraulic filter elements and fluid control devices used in commercial aerospace applications, unique filter mechanisms used in micro-propulsion devices for satellites and custom designed filters for manned aircraft and submarines. Mayday designs and manufactures mission-critical bushings, pins, sleeves and precision-tolerance machined components for landing gear, rotor heads, engine mounts, flight controls, and actuation systems for the aerospace and defense industries. Hi-Tech is a full-service metal processor offering aerospace OEM’s and Tier 1 suppliers, a large portfolio of processing services including anodizing, cadmium and zinc-nickel plating, organic coatings, non-destructive testing, and heat treatment. Westland designs, develops and manufactures elastomeric-based signature reduction solutions for U.S. naval vessels.

Globe supplies navy, defense, and industrial customers with mission-critical composite-based products and solutions for acoustic, signature-reduction, communications, sealing, vibration-reducing, surface control, and hydrodynamic-related applications.

The USG segment’s operations consist of Doble Engineering Company and related subsidiaries (Doble), Morgan Schaffer Ltd. (Morgan Schaffer), and NRG Systems, Inc. (NRG). Doble provides high-end, intelligent diagnostic test solutions for the electric power delivery industry and is a leading supplier of power factor and partial discharge testing instruments used to assess the integrity of high-voltage power delivery equipment. Morgan Schaffer provides an integrated offering of dissolved gas analysis, oil testing, and data management solutions which enhance the ability of electric utilities to accurately monitor the health of critical power transformers. NRG designs and manufactures decision support tools for the renewable energy industry, primarily wind.

The Test segment's operations consist of ETS-Lindgren Inc. and related subsidiaries (ETS-Lindgren). ETS-Lindgren is an industry leader in providing its customers with the ability to identify, measure and contain magnetic, electromagnetic and acoustic energy. ETS-Lindgren also manufactures radio frequency shielding products and components used by manufacturers of medical equipment, communications systems, electronic products, and shielded rooms for high-security data processing and secure communication.

The Technical Packaging segment’s operations consist of Thermoform Engineered Quality LLC (TEQ), Plastique Limited and Plastique sp. z o.o. The companies within this segment provide innovative solutions to the medical and commercial markets for thermoformed and precision molded pulp fiber packages and specialty products using a wide variety of thin gauge plastics and pulp.

Accounting policies of the segments are the same as those described in the summary of significant accounting policies in Note 1 to the Consolidated Financial Statements. The operating units within each reporting segment have been aggregated because of similar economic characteristics and meet the other aggregation criteria of FASB ASC 280.

The Company evaluates the performance of its operating units based on EBIT, which is defined as earnings before interest and taxes. EBIT on a consolidated basis is a non-GAAP financial measure; see “Non-GAAP Financial Measures” in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Intersegment sales and transfers are not significant. Segment assets consist primarily of customer receivables, inventories, capitalized software and fixed assets directly associated with the production processes of the segment. Segment depreciation and amortization is based upon the direct assets listed above.

Net Sales



(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	325.8	286.8	279.5
USG		211.9	214.0	162.4
Test		188.4	182.9	160.9
USG		—
Technical Packaging		86.9	87.9	82.9
Consolidated totals	$	813.0	771.6	685.7

No customer exceeded 10% of sales in 2019 or 2018.

EBIT


(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	70.1	58.7	52.2
USG		52.2	43.2	36.6
Test		25.6	23.8	19.5
USG		—
Technical Packaging		5.9	8.1	8.5
Reconciliation to consolidated totals (Corporate)		(43.2)	(37.0)	(32.1)
Consolidated EBIT		110.6	96.8	84.7
Less: interest expense		(8.4)	(8.8)	(4.6)
Earnings before income tax	$	102.2	88.0	80.1

Identifiable Assets


(Dollars in millions)
Year ended September 30,	2019		2018
Filtration	$	260.3	204.7
USG		190.0	176.9
Test		154.2	138.3
USG		—
Technical Packaging		59.1	50.9
Corporate – Goodwill		409.2	381.7
Corporate – Other assets		393.9	312.6
Consolidated totals	$	1,466.7	1,265.1

Corporate assets consist primarily of goodwill, deferred taxes, acquired intangible assets and cash balances.

Capital Expenditures


(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	11.7	7.0	10.2
USG		8.5	5.2	7.6
Test		4.0	3.0	4.5
USG		—
Technical Packaging		13.0	5.4	7.4
Corporate		—	—	—
Consolidated totals	$	37.2	20.6	29.7

In addition to the above amounts, the Company incurred expenditures for capitalized software of $8.4 million, $9.5 million and $9.0 million in 2019, 2018 and 2017, respectively.

Depreciation and Amortization


(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	8.3	7.6	6.6
USG		11.3	11.0	9.8
Test		5.1	4.5	3.6
USG		—
Technical Packaging		4.1	4.1	3.5
Corporate		11.3	10.6	8.7
Consolidated totals	$	40.1	37.8	32.2

Depreciation expense of property, plant and equipment was $20.6 million, $19.4 million and $15.9 million for 2019, 2018 and 2017, respectively.

Geographic Information

Net Sales


(Dollars in millions)
Year ended September 30,	2019		2018	2017
United States	$	583.0	536.7	503.1
Asia		88.3	94.5	69.8
Europe		82.8	85.0	75.4
Canada		33.2	30.3	22.2
India		11.7	9.4	4.8
Other		14.0	15.7	10.4
Consolidated totals	$	813.0	771.6	685.7

Long-Lived Assets


(Dollars in millions)
Year ended September 30,	2019		2018
United States	$	140.0	113.2
Europe		16.6	17.1
Other		4.9	4.7
Consolidated totals	$	161.5	135.0

Net sales are attributed to countries based on location of customer. Long-lived assets are attributed to countries based on location of the asset.

Commitments and Contingencies

12 Months Ended

Sep. 30, 2019

Commitments and Contingencies

Commitments and Contingencies

14. Commitments and Contingencies

The Company leases certain real property, equipment and machinery under non-cancelable operating leases. Rental expense under these operating leases was $6.4 million, $6.9 million and $6.8 million for 2019, 2018 and 2017, respectively. Future aggregate minimum lease payments under operating leases that have initial or remaining non-cancelable lease terms in excess of one year as of September 30, 2019, are:


(Dollars in thousands)
Years ending September 30:
2020	$	6,405
2021		5,279
2022		4,592
2023		3,567
2024 and thereafter		10,197
Total	$	30,040

At September 30, 2019, the Company had $8.2 million in letters of credit outstanding as guarantees of contract performance. As a normal incident of the businesses in which the Company is engaged, various claims, charges and litigation are asserted or commenced from time to time against the Company. Additionally, the Company is currently involved in various stages of investigation and remediation relating to environmental matters. It is the opinion of Management that the aggregate costs involved in the resolution of these matters, and final judgments, if any, which might be rendered against the Company are adequately accrued, are covered by insurance or are not likely to have a material adverse effect on the Company’s results from continuing operations, capital expenditures or competitive position.

Capital Leases

12 Months Ended

Sep. 30, 2019

Capital Leases

Capital Leases

15. Capital Leases

The Company leases certain real property, equipment and machinery under capital leases, primarily associated with the new Doble building in Marlborough, Massachusetts and the 2017 acquisitions of NRG and Mayday. The Doble facility lease expires in 2036, the NRG and Mayday facility leases expire in 2029, and the machinery leases expire in 2020. As of September 30, 2019, the net carrying value and accumulated depreciation of the assets under capital leases recorded by the Company were $28.4 million and $3.5 million, respectively. Capital lease obligations are included within other long-term liabilities (long-term portion) and accrued other expenses (current portion). Remaining payments due on the Company’s capital lease obligations as of September 30, 2019, are:


(Dollars in thousands)
Years ending September 30:
2020	$	2,518
2021		2,930
2022		3,012
2023		3,094
2024 and thereafter		31,499
Total minimum lease payments		43,053
Less: amounts representing interest		11,241
Present value of net minimum lease payments		31,812
Current portion of capital lease obligations		1,832
Non-current portion of capital lease obligations	$	29,980

Revenues

12 Months Ended

Sep. 30, 2019

Revenues

Revenues

16. Revenues

(a)	Disaggregation of Revenues

Our revenues by customer type, geographic location, and revenue recognition method for the year ended September 30, 2019 are presented in the table below as the Company deems it best depicts how the nature, amount, timing and uncertainty of net sales and cash flows are affected by economic factors. The table below also includes a reconciliation of the disaggregated revenue within our reportable segments.


Year Ended September 30, 2019							Technical
(In thousands)	Filtration		USG		Test		Packaging		Total
Customer type:
Commercial	$	180,356	$	207,666	$	168,201	$	86,599	$	642,822
Government		145,379		4,249		20,193		327		170,148
Total revenues	$	325,735	$	211,915	$	188,394	$	86,926	$	812,970

Geographic location:
United States	$	274,446	$	150,381	$	112,358	$	45,787	$	582,972
International		51,289		61,534		76,036		41,139		229,998
Total revenues	$	325,735	$	211,915	$	188,394	$	86,926	$	812,970

Revenue recognition method:
Point in time	$	164,224	$	164,126	$	36,787	$	—	$	365,137
Over time		161,511		47,789		151,607		86,926		447,833
Total revenues	$	325,735	$	211,915	$	188,394	$	86,926	$	812,970

(b)	Remaining Performance Obligations

Our remaining performance obligations, which is the equivalent of our backlog, represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts. These remaining obligations include amounts that have been formally appropriated under contracts with the U.S. Government, and exclude unexercised contract options and potential orders under ordering-type contracts such as Indefinite Delivery, Indefinite Quantity contracts. At September 30, 2019, we had $475 million in remaining performance obligations of which we expect to recognize revenues of 90% in the next twelve months.

(c)	Contract assets and liabilities

Assets and liabilities related to our contracts with customers are reported on a contract-by-contract basis at the end of each reporting period. At September 30, 2019, contract assets and liabilities totaled $115.3 million and $81.2 million, respectively. Upon adoption of ASC 606 on October 1, 2018, contract assets and liabilities related to our contracts with customers were $87 million and $51 million, respectively. During 2019, we recognized approximately $40 million in revenues that were included in the contract liabilities balance at the adoption date.

(d)	Reconciliation of ASC 606 to Prior Accounting Standards

The amount by which each financial statement line item is affected in 2019 as a result of applying the new accounting standard as discussed in Note 2 is presented below:


	September 30, 2019
			Effect of the
			adoption of		Under Prior
(In thousands)	As Reported		ASC 606		Accounting
Consolidated Balance Sheets
Contract assets (1)	$	115,310	$	(39,055)	$	76,255
Inventories		128,825		34,065		162,890
Total current assets		495,194		(4,990)		490,204
Total assets		1,466,720		(4,990)		1,461,730
Contract liabilities (2)		81,177		2,870		84,047
Total current liabilities		251,635		2,870		254,505
Deferred tax liabilities		64,855		(658)		64,197
Total liabilities		640,498		2,212		642,710
Retained earnings		684,741		(7,202)		677,539
Total shareholders’ equity		826,222		(7,202)		819,020
Total liabilities and shareholders’ equity	$	1,466,720		(4,990)		1,461,730

(1)

Previously “cost and estimated earnings on long-term contracts”

(2)

Previously “advance payments on long-term contracts” and “current portion of deferred revenue”


	Year ended
	September 30, 2019
			Effect of the
			adoption of		Under Prior
(In thousands, except per share amounts)	As Reported		ASC 606		Accounting
Consolidated Statements of Operations
Net sales	$	812,970	$	(5,598)	$	807,372
Cost of sales		508,521		(6,658)		501,863
Total costs and expenses		710,754		(6,658)		704,096
Earnings before income tax		102,216		1,060		103,276
Income tax expense		21,177		255		21,432
Net earnings		81,039		805		81,844
Earnings per share:
Basic:
Net earnings	$	3.12	$	0.03	$	3.15
Diluted:
Net earnings	$	3.10	$	0.03	$	3.13
Consolidated Statements of Comprehensive Income
Net earnings	$	81,039	$	805	$	81,844
Comprehensive income		68,593		805		69,398
Consolidated Statements of Cash flows
Net earnings	$	81,039	$	805	$	81,844
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in assets and liabilities	$	(9,944)		(805)	$	(10,749)
Net cash provided by operating activities		105,137		—		105,137

Quarterly Financial Information (Unaudited)

12 Months Ended

Sep. 30, 2019

Quarterly Financial Information (Unaudited)

Quarterly Financial Information (Unaudited)

18. Quarterly Financial Information (Unaudited)


	First		Second	Third	Fourth
(Dollars in thousands, except per share amounts)	Quarter		Quarter	Quarter	Quarter
2019

Net sales	$	182,597	193,949	199,766	236,658
Net earnings		17,317	18,797	20,067	24,858

Earnings per share:
Basic	$	0.67	0.73	0.77	0.96
Diluted		0.66	0.72	0.77	0.95

Dividends declared per common share	$	0.08	0.08	0.08	0.08

Common stock price per share:
High	$	71.47	71.29	82.70	85.86
Low		59.00	62.91	67.43	73.04

2018

Net sales	$	173,495	174,778	192,223	231,086
Net earnings		34,671	9,994	19,019	28,452

Earnings per share:
Basic	$	1.34	0.39	0.73	1.10
Diluted		1.33	0.38	0.73	1.09

Dividends declared per common share	$	0.08	0.08	0.08	0.08

Common stock price per share:
High	$	65.95	66.80	60.25	70.20
Low		51.55	57.15	54.35	57.00

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2019

Summary of Significant Accounting Policies

Principles of Consolidation

A. Principles of Consolidation

Basis of Presentation

B. Basis of Presentation

Nature of Operations

C. Nature of Operations

Test: ETS-Lindgren Inc. provides its customers with the ability to identify, measure and contain magnetic, electromagnetic and acoustic energy.

Use of Estimates

D. Use of Estimates

Revenue Recognition

E. Revenue Recognition

Revenue Recognition

Total contract cost is estimated utilizing current contract specifications and expected engineering requirements. Contract costs typically are incurred over a period of several months to a year, and the estimation of these costs requires judgment. Our cost estimation process is based on the professional knowledge and experience of engineers and program managers along with finance professionals. We review and update our projections of costs quarterly or more frequently when circumstances significantly change.

performance obligations. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

For contracts where revenue is recognized over time, we generally recognize changes in estimated contract revenues, costs and profits using the cumulative catch-up method of accounting. This method recognizes the cumulative effect of changes on current and prior periods with the impact of the change from inception-to-date recorded in the current period. Anticipated losses on contracts are recognized in full in the period in which the losses become probable and estimable.

Contract Assets and Liabilities

See the further discussion of the Company’s revenue recognition in Note 16 below.

Prior to Adoption of ASC 606

Cash and Cash Equivalents

F. Cash and Cash Equivalents

Cash equivalents include temporary investments that are readily convertible into cash, such as money market funds, with original maturities of three months or less.

Accounts Receivable

G. Accounts Receivable

Inventories

H. Inventories

Property, Plant and Equipment

I. Property, Plant and Equipment

Leases

J. Leases

Goodwill and Other Long-Lived Assets

K. Goodwill and Other Long-Lived Assets

Capitalized Software

L. Capitalized Software

Income Taxes

M. Income Taxes

Research and Development Costs

N. Research and Development Costs

Foreign Currency Translation

O. Foreign Currency Translation

Earnings Per Share

P. Earnings Per Share

The number of shares used in the calculation of earnings per share for each year presented is as follows:


(in thousands)	2019	2018	2017
Weighted Average Shares Outstanding — Basic	25,946	25,874	25,774
Performance- Accelerated Restricted Stock	151	184	221
Shares — Diluted	26,097	26,058	25,995

Share-Based Compensation

Q. Share-Based Compensation

Accumulated Other Comprehensive Loss

R. Accumulated Other Comprehensive Loss

Deferred Revenue and Costs

S. Deferred Revenue and Costs

Derivative Financial Instruments

T. Derivative Financial Instruments

Fair Value Measurements

U. Fair Value Measurements

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Financial Assets and Liabilities

Nonfinancial Assets and Liabilities

New Accounting Standards

V. New Accounting Standards

Leases

Other Standards

Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Sep. 30, 2019

Goodwill and Other Intangible Assets

Schedule of goodwill and intangible assets

Included on the Company’s Consolidated Balance Sheets at September 30, 2019 and 2018 are the following intangible assets gross carrying amounts and accumulated amortization:


(Dollars in millions)	2019		2018
Goodwill	$	409.2	381.7

Intangible assets with determinable lives:
Patents
Gross carrying amount	$	2.1	1.8
Less: accumulated amortization		0.9	0.8
Net	$	1.2	1.0

Capitalized software
Gross carrying amount	$	79.7	71.3
Less: accumulated amortization		49.2	41.6
Net	$	30.5	29.7

Customer Relationships
Gross carrying amount	$	241.3	185.3
Less: accumulated amortization		59.0	47.8
Net	$	182.3	137.5

Other
Gross carrying amount	$	5.3	5.5
Less: accumulated amortization		2.6	2.0
Net	$	2.7	3.5
Intangible assets with indefinite lives:
Trade names	$	176.3	173.7

Schedule of carrying amount of goodwill attributable to each business segment

The changes in the carrying amount of goodwill attributable to each business segment for 2019 and 2018 are as follows:


(Dollars in millions)	Filtration		Test	USG	Technical Packaging	Total
Balance as of September 30, 2017	$	73.7	34.1	250.2	19.9	377.9
Acquisition activity		—	—	3.9	—	3.9
Foreign currency translation and other		—	—	—	(0.1)	(0.1)
Balance as of September 30, 2018		73.7	34.1	254.1	19.8	381.7
Acquisition activity		28.5	—	—	—	28.5
Foreign currency translation and other		—	—	(0.1)	(0.9)	(1.0)
Balance as of September 30, 2019	$	102.2	34.1	254.0	18.9	409.2

Inventories, Net (Tables)

12 Months Ended

Sep. 30, 2019

Inventories, Net

Schedule of inventories

Inventories consist of the following at September 30, 2019 and 2018:


(Dollars in thousands)	2019		2018
Finished goods	$	23,550	26,678
Work in process		26,407	47,765
Raw materials		78,868	60,973
Total	$	128,825	135,416

Income Tax Expense (Tables)

12 Months Ended

Sep. 30, 2019

Income Tax Expense

Components Of Income From Continuing Operations Before Income Taxes

The components of income before income taxes for 2019, 2018 and 2017 consisted of the following:


(Dollars in thousands)	2019		2018	2017
United States	$	93,654	80,994	72,353
Foreign		8,562	7,029	7,800
Total income before income taxes	$	102,216	88,023	80,153

Principal Components Of Income Tax Expense (Benefit) From Continuing Operations

The principal components of income tax expense (benefit) for 2019, 2018 and 2017 consist of:


(Dollars in thousands)	2019		2018	2017
Federal:
Current	$	14,097	9,174	21,448
Deferred		1,020	(22,943)	628
State and local:
Current		3,189	2,121	1,795
Deferred		204	2,972	(49)
Foreign:
Current		2,493	2,233	4,450
Deferred		174	2,330	(1,822)
Total	$	21,177	(4,113)	26,450

Schedule Of Actual Income Tax Expense (Benefit) From Continuing Operations

The actual income tax expense (benefit) for 2019, 2018 and 2017 differs from the expected tax expense for those years (computed by applying the U.S. Federal corporate statutory rate) as follows:


	2019		2018		2017
Federal corporate statutory rate	21.0	%	24.5	%	35.0	%
State and local, net of Federal benefits	3.3		3.0		2.4
Foreign	0.7		0.6		(0.1)
Research credit	(0.9)		(1.6)		(1.1)
Domestic production deduction	—		(1.1)		(2.7)
Change in uncertain tax positions	(0.1)		(0.1)		—
Executive compensation	0.3		(0.1)		(0.1)
Valuation allowance	(2.4)		3.0		(0.3)
GILTI and FDII	(0.8)		—		—
Tax reform – impact on U.S. deferred tax assets and liabilities	(0.3)		(37.2)		—
Tax reform – transition tax	(0.1)		1.5		—
Tax reform – taxes related to foreign unremitted earnings	—		2.8		—
Other, net	—		—		(0.1)
Effective income tax rate	20.7	%	(4.7)	%	33.0	%

Tax Effects Of Temporary Differences That Give Rise To Significant Portions Of The Deferred Tax Assets And Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at September 30, 2019 and 2018 are presented below:


(Dollars in thousands)	2019		2018
Deferred tax assets:
Inventories	$	5,089	5,834
Pension and other postretirement benefits		5,533	3,969
Net operating and capital loss carryforwards — domestic		617	639
Net operating loss carryforward — foreign		3,766	4,603
Foreign tax credit carryforward		—	2,377
Other compensation-related costs and other cost accruals		7,952	7,048
State credit carryforward		1,914	2,103
Total deferred tax assets		24,871	26,573

Deferred tax liabilities:
Timing differences related to revenue recognition		(1,508)	—
Goodwill		(2,673)	(969)
Acquisition assets		(60,224)	(62,841)
Depreciation, software amortization		(20,161)	(19,584)
Net deferred tax liabilities before valuation allowance		(59,695)	(56,821)
Less valuation allowance		(4,520)	(7,144)
Net deferred tax liabilities	$	(64,215)	(63,965)

Share-Based Compensation (Tables)

12 Months Ended

Sep. 30, 2019

Share-Based Compensation

Schedule Of Outstanding Restricted Share Awards

The following summary presents information regarding outstanding PARS awards as of the specified dates, and changes during the specified periods:


	FY 2019			FY 2018			FY 2017
		Estimated			Estimated			Estimated
		Weighted			Weighted			Weighted
	Shares	Avg. Price		Shares	Avg. Price		Shares	Avg. Price
Nonvested at October 1,	315,544	$	47.23	335,825	$	40.35	427,438	$	35.40
Granted	84,862		74.77	104,320		56.06	110,422		51.16
Vested	(113,402)		37.00	(121,301)		35.59	(202,035)		35.78
Cancelled	(6,000)		45.20	(3,300)		53.86	—		—
Nonvested at September 30,	281,004	$	59.72	315,544	$	47.23	335,825	$	40.35

Retirement and Other Benefit Plans (Tables)

12 Months Ended

Sep. 30, 2019

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule Of Reconciliation Of Benefit Obligation


(Dollars in millions)
Reconciliation of benefit obligation	2019		2018
Net benefit obligation at beginning of year	$	89.8	95.3
Interest cost		3.7	3.4
Actuarial loss (gain)		11.3	(4.3)
Gross benefits paid		(4.7)	(4.6)
Settlements		—	—
Net benefit obligation at end of year	$	100.1	89.8

Schedule Of Reconciliation Of Fair Value Of Plan Assets


(Dollars in millions)
Reconciliation of fair value of plan assets	2019		2018
Fair value of plan assets at beginning of year	$	73.3	65.0
Actual return on plan assets		5.9	2.7
Employer contributions		2.7	10.2
Gross benefits paid		(4.7)	(4.6)
Settlements		—	—
Fair value of plan assets at end of year	$	77.2	73.3

Schedule Of Funded Status


(Dollars in millions)
Funded Status	2019		2018
Funded status at end of year	$	(22.9)	(16.5)
Accrued benefit cost		(22.9)	(16.5)

Amounts recognized in the Balance Sheet consist of:
Current liability		(0.2)	(0.2)
Noncurrent liability		(22.7)	(16.3)
Accumulated other comprehensive (income)/loss (before tax effect)		49.6	41.9

Amounts recognized in accumulated other comprehensive (income)/loss consist of:
Net actuarial loss		49.6	41.9

Accumulated other comprehensive (income)/loss (before tax effect)	$	49.6	41.9

Schedule of components of net periodic benefit cost

The following table provides the components of net periodic benefit cost for the plans for 2019, 2018 and 2017:


(Dollars in millions)	2019		2018	2017
Service cost	$	—	—	—
Interest cost		3.7	3.4	3.2
Expected return on plan assets		(4.4)	(3.8)	(3.9)
Net actuarial loss		2.1	2.3	2.6
Net periodic benefit cost		1.4	1.9	1.9
Defined contribution plans		7.3	7.1	6.3
Total	$	8.7	9.0	8.2

Schedule Of Asset Allocation For Pension Plans Acceptable Range And Target Allocation By Asset Category

The asset allocation for the Company’s pension plans at the end of 2019 and 2018, and the Company’s acceptable range and the target allocation for 2020, by asset category, are as follows:


	Target				Percentage of Plan Assets at
	Allocation		Acceptable		Year-end
Asset Category	2020		Range		2019		2018
Return seeking	53	%	48%-58	%	41	%	44	%
Liability hedging	47	%	42%-52	%	56	%	54	%
Cash/cash equivalents	0	%	0%-10	%	3	%	2	%

Schedule Of Fair Value Of Financial Measurements

The fair values of the Company’s defined benefit plan investments as of September 30, 2019 and 2018, by asset category, were as follows:


(Dollars in millions)	2019		2018
Investments at fair value:
Cash and cash equivalents	$	2.1	2.1
Common and preferred stock funds:
Domestic large capitalization		8.8	8.7
Domestic small-/mid-capitalization		2.4	2.7
International funds		10.6	10.8
Fixed income funds		49.7	45.6
Real estate investment funds		3.6	3.4
Total investments at fair value	$	77.2	73.3

Schedule Of Expected Benefit Payments

Information about the expected cash flows for the pension and other postretirement benefit plans follows:


	Pension		Other
(Dollars in millions)	Benefits		Benefits
Expected Employer Contributions — 2020	$	0.7	0.1
Expected Benefit Payments:
2020		5.8	0.1
2021		5.5	0.1
2022		5.7	0.1
2023		5.8	0.1
2024		5.9	0.1
2025‑2029	$	30.2	0.2

Net Periodic Benefit Cost

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule Of Weighted-Average Assumptions Used To Determine The Net Periodic Benefit Cost For Pension Plans

The following weighted-average assumptions were used to determine the net periodic benefit cost for the pension plans:


	2019		2018		2017
Discount rate	4.15	%	3.65	%	3.25	%
Rate of increase in compensation levels	N/A		N/A		N/A
Expected long-term rate of return on assets	6.00	%	6.00	%	6.25	%

Net Periodic Benefit Obligations

Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]

Schedule Of Weighted-Average Assumptions Used To Determine The Net Periodic Benefit Cost For Pension Plans

The following weighted-average assumptions were used to determine the net periodic benefit obligations for the pension plans:


	2019		2018
Discount rate	3.05	%	4.15	%
Rate of increase in compensation levels	N/A		N/A

Derivative Financial Instruments (Tables)

12 Months Ended

Sep. 30, 2019

Derivative Financial Instruments

Schedule of outstanding derivative financial instruments


	Notional Amount		Fair Value
(In thousands)	(Currency)		(US$)	Fix Rate
Forward contracts	5,750	USD	(35)
Interest rate swap	150,000	USD	(19)	2.09	%
Interest rate swap *	150,000	USD	(1,143)	2.24	%

* This swap represents a forward contract and will be effective in November 2019.

Schedule of fair value of financial instruments

The Company’s forward contracts are classified within Level 2 of the valuation hierarchy in accordance with ASC 825, as presented below as of September 30, 2019:


(In thousands)	Level 1		Level 2	Level 3	Total
Asset:
Forward contracts	$	—	(1,197)	—	(1,197)

Business Segment Information (Tables)

12 Months Ended

Sep. 30, 2019

Business Segment Information

Schedule of Net Sales and Earnings Before Income Tax

Net Sales



(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	325.8	286.8	279.5
USG		211.9	214.0	162.4
Test		188.4	182.9	160.9
USG		—
Technical Packaging		86.9	87.9	82.9
Consolidated totals	$	813.0	771.6	685.7

No customer exceeded 10% of sales in 2019 or 2018.

EBIT


(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	70.1	58.7	52.2
USG		52.2	43.2	36.6
Test		25.6	23.8	19.5
USG		—
Technical Packaging		5.9	8.1	8.5
Reconciliation to consolidated totals (Corporate)		(43.2)	(37.0)	(32.1)
Consolidated EBIT		110.6	96.8	84.7
Less: interest expense		(8.4)	(8.8)	(4.6)
Earnings before income tax	$	102.2	88.0	80.1

Schedule of Identifiable Assets

Identifiable Assets


(Dollars in millions)
Year ended September 30,	2019		2018
Filtration	$	260.3	204.7
USG		190.0	176.9
Test		154.2	138.3
USG		—
Technical Packaging		59.1	50.9
Corporate – Goodwill		409.2	381.7
Corporate – Other assets		393.9	312.6
Consolidated totals	$	1,466.7	1,265.1

Schedule of Capital Expenditures

Capital Expenditures


(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	11.7	7.0	10.2
USG		8.5	5.2	7.6
Test		4.0	3.0	4.5
USG		—
Technical Packaging		13.0	5.4	7.4
Corporate		—	—	—
Consolidated totals	$	37.2	20.6	29.7

Schedule of Depreciation and Amortization

Depreciation and Amortization


(Dollars in millions)
Year ended September 30,	2019		2018	2017
Filtration	$	8.3	7.6	6.6
USG		11.3	11.0	9.8
Test		5.1	4.5	3.6
USG		—
Technical Packaging		4.1	4.1	3.5
Corporate		11.3	10.6	8.7
Consolidated totals	$	40.1	37.8	32.2

Schedule of Geographic Information Net Sale

Geographic Information

Net Sales


(Dollars in millions)
Year ended September 30,	2019		2018	2017
United States	$	583.0	536.7	503.1
Asia		88.3	94.5	69.8
Europe		82.8	85.0	75.4
Canada		33.2	30.3	22.2
India		11.7	9.4	4.8
Other		14.0	15.7	10.4
Consolidated totals	$	813.0	771.6	685.7

Schedule of Geographic Information Long-Lived Assets

Long-Lived Assets


(Dollars in millions)
Year ended September 30,	2019		2018
United States	$	140.0	113.2
Europe		16.6	17.1
Other		4.9	4.7
Consolidated totals	$	161.5	135.0

Capital Leases (Tables)

12 Months Ended

Sep. 30, 2019

Capital Leases

Schedule of Future Minimum Lease Payments for Capital Leases


(Dollars in thousands)
Years ending September 30:
2020	$	2,518
2021		2,930
2022		3,012
2023		3,094
2024 and thereafter		31,499
Total minimum lease payments		43,053
Less: amounts representing interest		11,241
Present value of net minimum lease payments		31,812
Current portion of capital lease obligations		1,832
Non-current portion of capital lease obligations	$	29,980

Revenues (Tables)

12 Months Ended

Sep. 30, 2019

Revenues

Schedule of disaggregation of revenue by reportable segment


Year Ended September 30, 2019							Technical
(In thousands)	Filtration		USG		Test		Packaging		Total
Customer type:
Commercial	$	180,356	$	207,666	$	168,201	$	86,599	$	642,822
Government		145,379		4,249		20,193		327		170,148
Total revenues	$	325,735	$	211,915	$	188,394	$	86,926	$	812,970

Geographic location:
United States	$	274,446	$	150,381	$	112,358	$	45,787	$	582,972
International		51,289		61,534		76,036		41,139		229,998
Total revenues	$	325,735	$	211,915	$	188,394	$	86,926	$	812,970

Revenue recognition method:
Point in time	$	164,224	$	164,126	$	36,787	$	—	$	365,137
Over time		161,511		47,789		151,607		86,926		447,833
Total revenues	$	325,735	$	211,915	$	188,394	$	86,926	$	812,970

Schedule of reconciliation of ASC 606 to prior accounting standards

The amount by which each financial statement line item is affected in 2019 as a result of applying the new accounting standard as discussed in Note 2 is presented below:


	September 30, 2019
			Effect of the
			adoption of		Under Prior
(In thousands)	As Reported		ASC 606		Accounting
Consolidated Balance Sheets
Contract assets (1)	$	115,310	$	(39,055)	$	76,255
Inventories		128,825		34,065		162,890
Total current assets		495,194		(4,990)		490,204
Total assets		1,466,720		(4,990)		1,461,730
Contract liabilities (2)		81,177		2,870		84,047
Total current liabilities		251,635		2,870		254,505
Deferred tax liabilities		64,855		(658)		64,197
Total liabilities		640,498		2,212		642,710
Retained earnings		684,741		(7,202)		677,539
Total shareholders’ equity		826,222		(7,202)		819,020
Total liabilities and shareholders’ equity	$	1,466,720		(4,990)		1,461,730

(1)

Previously “cost and estimated earnings on long-term contracts”

(2)

Previously “advance payments on long-term contracts” and “current portion of deferred revenue”


	Year ended
	September 30, 2019
			Effect of the
			adoption of		Under Prior
(In thousands, except per share amounts)	As Reported		ASC 606		Accounting
Consolidated Statements of Operations
Net sales	$	812,970	$	(5,598)	$	807,372
Cost of sales		508,521		(6,658)		501,863
Total costs and expenses		710,754		(6,658)		704,096
Earnings before income tax		102,216		1,060		103,276
Income tax expense		21,177		255		21,432
Net earnings		81,039		805		81,844
Earnings per share:
Basic:
Net earnings	$	3.12	$	0.03	$	3.15
Diluted:
Net earnings	$	3.10	$	0.03	$	3.13
Consolidated Statements of Comprehensive Income
Net earnings	$	81,039	$	805	$	81,844
Comprehensive income		68,593		805		69,398
Consolidated Statements of Cash flows
Net earnings	$	81,039	$	805	$	81,844
Adjustments to reconcile net earnings to net cash provided by operating activities:
Change in assets and liabilities	$	(9,944)		(805)	$	(10,749)
Net cash provided by operating activities		105,137		—		105,137

Quarterly Financial Information (Unaudited) (Tables)

12 Months Ended

Sep. 30, 2018

Quarterly Financial Information (Unaudited)

Schedule of Quarterly Financial Information


	First		Second	Third	Fourth
(Dollars in thousands, except per share amounts)	Quarter		Quarter	Quarter	Quarter
2019

Net sales	$	182,597	193,949	199,766	236,658
Net earnings		17,317	18,797	20,067	24,858

Earnings per share:
Basic	$	0.67	0.73	0.77	0.96
Diluted		0.66	0.72	0.77	0.95

Dividends declared per common share	$	0.08	0.08	0.08	0.08

Common stock price per share:
High	$	71.47	71.29	82.70	85.86
Low		59.00	62.91	67.43	73.04

2018

Net sales	$	173,495	174,778	192,223	231,086
Net earnings		34,671	9,994	19,019	28,452

Earnings per share:
Basic	$	1.34	0.39	0.73	1.10
Diluted		1.33	0.38	0.73	1.09

Dividends declared per common share	$	0.08	0.08	0.08	0.08

Common stock price per share:
High	$	65.95	66.80	60.25	70.20
Low		51.55	57.15	54.35	57.00

Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($)	Sep. 30, 2019 USD ($) segment	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)	Oct. 01, 2018 USD ($)	Mar. 14, 2018 USD ($)	Aug. 30, 2017 USD ($)	May 25, 2017 USD ($)	May 08, 2017 USD ($)	Nov. 07, 2016 USD ($)
Number of reportable segments \| segment		4
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ (43,974,000)	$ (43,974,000)	$ (31,528,000)
Accumulated Other Comprehensive (Income) Loss, Defined Benefit Plan, after Tax	(37,000,000.0)	(37,000,000.0)	(30,900,000)
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	(7,000,000.0)	(7,000,000.0)	(500,000)
Research and Development Expense		14,500,000	13,100,000	$ 14,000,000.0
Retained earnings	684,741,000	684,741,000	606,837,000
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax		6,300,000	(6,261,000)
Asset Impairment Charges	0	$ 0
Warranty period		12 months
Goodwill	409,215,000	$ 409,215,000	381,652,000	377,900,000		$ 3,500,000	$ 10,700,000	$ 4,800,000	$ 7,500,000	$ 30,100,000
NRG led management [Member]
Goodwill	8,000,000	8,000,000
Tradename	8,000,000	8,000,000
Maintenance [Member]
Cost of Goods and Services Sold		15,800,000	13,100,000	$ 10,400,000
ASU 2014-09
Retained earnings					$ 5,200,000
ASU 2016-02
Right-of-use assets	25,000,000	25,000,000
Lease liabilities	$ 25,000,000	$ 25,000,000
Foreign Exchange Forward [Member]
Accumulated Other Comprehensive Income (Loss), Net of Tax			$ (100,000)
Maximum \| Building [Member]
Property, Plant and Equipment, Useful Life		40 years
Maximum \| Machinery and Equipment [Member]
Property, Plant and Equipment, Useful Life		10 years
Maximum \| Office Furniture And Equipment [Member]
Property, Plant and Equipment, Useful Life		10 years
Minimum \| Building [Member]
Property, Plant and Equipment, Useful Life		10 years
Minimum \| Machinery and Equipment [Member]
Property, Plant and Equipment, Useful Life		3 years
Minimum \| Office Furniture And Equipment [Member]
Property, Plant and Equipment, Useful Life		3 years
USG
Percentage of segment revenues recognized when services are performed or when products are delivered		75.00%
Percentage of consolidated revenues recognized when services are performed or when products are delivered		19.00%
Revenue recognized when products were delivered or services performed under ASC 605 (as a percent)			75.00%	78.00%
Revenue recognized using percentage of completion method under ASC 605 (as a percent)			25.00%	22.00%
Percentage Of Segment Revenues Recognized On Straight Line Basis		25.00%
Percentage Of Consolidated Revenues Recognized On Straight Line Basis		7.00%
Filtration
Percentage of segment revenues recognized when services are performed or when products are delivered		50.00%
Percentage of consolidated revenues recognized when services are performed or when products are delivered		20.00%
Revenue recognized when products were delivered or services performed under ASC 605 (as a percent)			85.00%	86.00%
Revenue recognized using percentage of completion method under ASC 605 (as a percent)			15.00%	14.00%
Percentage Of Segment Revenues Recognized Over Time, Costs Incurred Plus Margin	50.00%	50.00%
Percentage Of Consolidated Revenues Recognized Over Time, Costs Incurred Plus Margin	20.00%	20.00%
Test
Percentage of segment revenues recognized when services are performed or when products are delivered		20.00%
Percentage of consolidated revenues recognized when services are performed or when products are delivered		4.00%
Percentage of segment revenues recorded under percentage of completion method		80.00%
Percentage of consolidated revenues recorded under percentage of completion method		19.00%
Revenue recognized when products were delivered or services performed under ASC 605 (as a percent)			25.00%	30.00%
Revenue recognized using percentage of completion method under ASC 605 (as a percent)			75.00%	70.00%
Technical Packaging
Percentage of segment revenues recognized when services are performed or when products are delivered		100.00%
Percentage of consolidated revenues recognized when services are performed or when products are delivered		11.00%
Revenue recognized when products were delivered or services performed under ASC 605 (as a percent)			100.00%	100.00%
Goodwill	$ 18,900,000	$ 18,900,000	$ 19,800,000	$ 19,900,000
Software Contract
Percentage of segment revenues recognized when services are performed or when products are delivered		10.00%
Percentage of consolidated revenues recognized when services are performed or when products are delivered		2.00%
Software Development \| Maximum
Property, Plant and Equipment, Useful Life		7 years
Software Development \| Minimum
Property, Plant and Equipment, Useful Life		3 years

Acquisitions (Details) $ in Thousands					1 Months Ended		12 Months Ended
Acquisitions (Details) $ in Thousands	Jul. 02, 2019 USD ($)	Mar. 14, 2018 USD ($)	May 08, 2017 USD ($)	Nov. 07, 2016 USD ($) a	Aug. 30, 2017 USD ($)	May 25, 2017 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2018 USD ($)	Sep. 30, 2017 USD ($)
Business Acquisition [Line Items]
Purchase price, net of cash acquired	$ 95,000		$ 38,600	$ 75,000			$ 96,777	$ 11,445	$ 198,628
Revenues	37,000
Payments to Acquire Businesses, Gross					$ 36,000	$ 48,800
Deferred Tax Liabilities, Goodwill							2,673	969
Goodwill		$ 3,500	7,500	30,100	10,700	4,800	$ 409,215	$ 381,652	$ 377,900
Customer contract assets	2,800
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	28,500			4,800
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Buildings					18,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles	59,700		17,200
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	6,300	200	9,400	16,600	300	1,700
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities				$ 15,700
Area of Land \| a				130,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables			4,100	$ 7,400	1,800	2,500
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Inventory	3,500	1,100	5,100	11,000	2,100	5,200
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Capital Lease Obligation			8,900	2,800
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets			400	9,500		400
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities, Accounts Payable	10,500	400	4,300		200	4,900
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Indefinite-Lived Intangible Assets	3,700	1,200	8,100		$ 3,200	35,600
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Cash and Equivalents			$ 1,500
Customer relationships
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill				$ 32,800
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life				20 years
Mayday Manufacturing Co [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Other Noncurrent Assets				$ 300
Morgan Schaffer Inc [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Finite-Lived Intangibles						$ 3,600
Morgan Schaffer Inc [Member] \| Customer Relationships and Developed Technology [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life						10 years
NRG Systems Inc [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life			14 years
Vanguard Instruments Company [Member]
Business Acquisition [Line Items]
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life					15 years
Manta Test Systems Inc [Member]
Business Acquisition [Line Items]
Payments to Acquire Businesses, Gross		9,500
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Buildings		3,500
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables		$ 400
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life		13 years
Globe Composite Solutions, LLC [Member]
Business Acquisition [Line Items]
Deferred Tax Liabilities, Goodwill	25,000
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Buildings	56,700
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets, Receivables	$ 3,500
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life	20 years

Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018	Mar. 14, 2018	Sep. 30, 2017	Aug. 30, 2017	May 25, 2017	May 08, 2017	Nov. 07, 2016
Goodwill and Other Intangible Assets
Goodwill	$ 409,215	$ 381,652	$ 3,500	$ 377,900	$ 10,700	$ 4,800	$ 7,500	$ 30,100
Patents
Goodwill and Other Intangible Assets
Gross carrying amount	2,100	1,800
Less: accumulated amortization	900	800
Net	1,200	1,000
Capitalized software
Goodwill and Other Intangible Assets
Gross carrying amount	79,700	71,300
Less: accumulated amortization	49,200	41,600
Net	30,500	29,700
Customer relationships
Goodwill and Other Intangible Assets
Gross carrying amount	241,300	185,300
Less: accumulated amortization	59,000	47,800
Net	182,300	137,500
Other
Goodwill and Other Intangible Assets
Gross carrying amount	5,300	5,500
Less: accumulated amortization	2,600	2,000
Net	2,700	3,500
Trade names
Goodwill and Other Intangible Assets
Trade names	$ 176,300	$ 173,700

Goodwill and Other Intangible Assets - Changes in carrying amount of goodwill (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Changes in goodwill
Goodwill, Beginning Balance	$ 381,652	$ 377,900
Acquisition activity	28,500	3,900
Foreign currency translation	(1,000)	(100)
Goodwill, Ending Balance	409,215	381,652
USG
Changes in goodwill
Goodwill, Beginning Balance	254,100	250,200
Acquisition activity	0	3,900
Foreign currency translation	(100)	0
Goodwill, Ending Balance	254,000	254,100
Test
Changes in goodwill
Goodwill, Beginning Balance	34,100	34,100
Acquisition activity	0	0
Foreign currency translation	0	0
Goodwill, Ending Balance	34,100	34,100
Filtration
Changes in goodwill
Goodwill, Beginning Balance	73,700	73,700
Acquisition activity	28,500	0
Foreign currency translation	0	0
Goodwill, Ending Balance	102,200	73,700
Technical Packaging
Changes in goodwill
Goodwill, Beginning Balance	19,800	19,900
Acquisition activity	0	0
Foreign currency translation	(900)	(100)
Goodwill, Ending Balance	$ 18,900	$ 19,800

Goodwill and Other Intangible Assets - Additional information (Details) - USD ($)	3 Months Ended	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Finite-Lived Intangible Assets [Line Items]
Amortization expense related to intangible assets		$ 19,488,000	$ 18,328,000	$ 16,338,000
Asset Impairment Charges	$ 0	0
Estimated intangibel asset amortization for 2020	22,000,000	22,000,000
Estimated intangibel asset amortization for 2021	22,000,000	22,000,000
Estimated intangibel asset amortization for 2022	22,000,000	22,000,000
Estimated intangibel asset amortization for 2023	22,000,000	22,000,000
Estimated intangibel asset amortization for 2024	$ 22,000,000	$ 22,000,000
Customer relationships \| Maximum
Finite-Lived Intangible Assets [Line Items]
Expected remaining useful life		20 years
Customer relationships \| Minimum
Finite-Lived Intangible Assets [Line Items]
Expected remaining useful life		15 years
Patents
Finite-Lived Intangible Assets [Line Items]
Expected remaining useful life		17 years
Capitalized software \| Maximum
Finite-Lived Intangible Assets [Line Items]
Expected remaining useful life		7 years
Capitalized software \| Minimum
Finite-Lived Intangible Assets [Line Items]
Expected remaining useful life		3 years

Inventories, Net (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
Inventories, Net
Finished goods	$ 23,550	$ 26,678
Work in process	26,407	47,765
Raw materials	78,868	60,973
Total inventories	$ 128,825	$ 135,416

Income Tax Expense - Principal Components Of Income Tax Expense (Benefit) From Continuing Operations (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Income Tax Expense
Federal, Current	$ 14,097	$ 9,174	$ 21,448
Federal, Deferred	1,020	(22,943)	628
State and local, Current	3,189	2,121	1,795
State and local, Deferred	204	2,972	(49)
Foreign, Current	2,493	2,233	4,450
Foreign, Deferred	174	2,330	(1,822)
Total	$ 21,177	$ (4,113)	$ 26,450

Income Tax Expense - Schedule Of Actual Income Tax Expense (Benefit) From Continuing Operations (Details)	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Income Tax Expense
Federal corporate statutory rate	21.00%	24.50%	35.00%
State and local, net of Federal benefits	3.30%	3.00%	2.40%
Foreign	0.70%	0.60%	(0.10%)
Research credit	(0.90%)	(1.60%)	(1.10%)
Domestic production deduction	0.00%	(1.10%)	(2.70%)
Change in uncertain tax positions	(0.10%)	(0.10%)	0.00%
Executive compensation	0.30%	(0.10%)	(0.10%)
Valuation allowance	(2.40%)	3.00%	(0.30%)
GILTI and FDII	(0.80%)	0.00%	0.00%
Tax reform - impact on U.S. deferred tax assets and liabilities	(0.30%)	(37.20%)	0.00%
Tax reform - transition tax	(0.10%)	1.50%	0.00%
Tax reform - taxes related to foreign unremitted earnings	0.00%	2.80%	0.00%
Other, net	0.00%	0.00%	(0.10%)
Effective income tax rate	20.70%	(4.70%)	33.00%

Income Tax Expense - Tax Effects Of Temporary Differences That Give Rise To Significant Portions Of The Deferred Tax Assets And Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
Deferred tax assets:
Inventories	$ 5,089	$ 5,834
Pension and other postretirement benefits	5,533	3,969
Net operating and capital loss carryforwards - domestic	617	639
Net operating loss carryforward - foreign	3,766	4,603
Foreign tax credit carryforward	0	2,377
Other compensation-related costs and other cost accruals	7,952	7,048
State credit carryforward	1,914	2,103
Total deferred tax assets	24,871	26,573
Deferred tax liabilities:
Timing differences related to revenue recognition	(1,508)	0
Goodwill	(2,673)	(969)
Acquisition assets	(60,224)	(62,841)
Depreciation, software amortization	(20,161)	(19,584)
Net deferred tax liabilities before valuation allowance	59,695	56,821
Less valuation allowance	(4,520)	(7,144)
Net deferred tax liabilities	$ (64,215)	$ (63,965)

Income Tax Expense - Additional information (Details) - USD ($)	1 Months Ended	12 Months Ended
	Dec. 22, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Income Tax Expense [Line Items]
Unrecognized Tax Benefits that Would Impact Effective Tax Rate		$ 0	$ 100,000	$ 100,000
Operating Loss Carryforwards, Valuation Allowance		600,000	600,000
Net operating loss carryforward - foreign		3,766,000	4,603,000
Deferred Tax Assets, Operating Loss Carryforwards, Not Subject to Expiration		16,000,000.0
Deferred Tax Assets, Operating Loss Carryforwards, Subject to Expiration		600,000
Deferred Tax Assets, Operating Loss Carryforwards, State and Local		600,000
Deferred Tax Assets, Tax Credit Carryforwards, Research		1,900,000
State Research And Other Credit Carryforwards, With Expiration Date		1,400,000
State Research And Other Credit Carry Forwards Without Expiration Date		500,000
Deferred Tax Assets, Valuation Allowance		4,520,000	7,144,000
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount		$ 2,600,000	$ 2,700,000
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent		21.00%	24.50%	35.00%
Defined Benefit Plan, Plan Assets, Contributions by Employer		$ 2,700,000	$ 10,200,000
Accrued interest related to uncertain tax positions		0
Penalties have been accrued		0
Excess Foreign Tax Credits
Income Tax Expense [Line Items]
Tax Credit Carryforward, Amount		0	2,400,000
Foreign Valuation Allowance
Income Tax Expense [Line Items]
Operating Loss Carryforwards, Valuation Allowance		3,600,000	3,800,000
State and Local Jurisdiction
Income Tax Expense [Line Items]
Operating Loss Carryforwards, Valuation Allowance		400,000	$ 400,000
Net operating loss carryforward - foreign		$ 16,600,000
Tax Cuts And Jobs Act
Income Tax Expense [Line Items]
Effective Income Taxes Foreign Withholding Taxes	$ 0

Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
Debt
Revolving credit facility, including current portion	$ 286,261	$ 220,000
Current portion of long-term debt	(21,261)	(20,000)
Total long-term debt, less current portion	$ 265,000	$ 200,000

Debt - Additional information (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Debt
Available to borrow under the credit facility	$ 207,000
Cash on hand	61,808	$ 30,477
Letters of Credit Outstanding, Amount	8,200	7,800
Maximum aggregate short-term borrowings at any month-end	308,000	271,000
Average aggregate short-term borrowings outstanding	$ 236,400	$ 258,800
Weighted average interest rates	3.21%	3.03%	2.09%
Equity interests in direct and indirect material foreign subsidiaries, pledged as collateral (as a percent)	100.00%
Long-term Debt, Current Maturities	$ 21,261	$ 20,000
Revolving Credit Facility
Debt
Line of Credit Facility, Amount Outstanding	500,000
Line of Credit Facility, Commitment Fee Amount	250,000
Maximum
Debt
Incremental term loan	$ 250,000

Capital Stock (Details) - USD ($) $ in Thousands	12 Months Ended
Capital Stock (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Capital Stock
Common shares as presented in the accompanying Consolidated Balance Sheets	30,596,940	30,534,786
Common shares in treasury	4,615,627	4,623,958
Board of Directors authorized an expanded stock repurchase program	$ 100,000
Stock repurchases during period, shares	0	0	0
Amount remaining available for repurchase under the Share repurchase program	$ 50,400

Share-Based Compensation - Schedule Of Outstanding Restricted Share Awards (Details) - $ / shares	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Share-Based Compensation
Outstanding restricted share awards, Nonvested at October 1,	315,544	335,825	427,438
Outstanding restricted share awards, Granted, Shares	84,862	104,320	110,422
Outstanding restricted share awards, Vested, Shares	(113,402)	(121,301)	(202,035)
Outstanding restricted share awards, Cancelled, Shares	(6,000)	(3,300)	0
Outstanding restricted share awards, Nonvested at September 30,	281,004	315,544	335,825
Outstanding restricted share awards, Nonvested at October 1, Weighted Avg. Price	$ 47.23	$ 40.35	$ 35.40
Outstanding restricted share awards, Granted, Weighted Avg. Price	74.77	56.06	51.16
Outstanding restricted share awards, Vested, Weighted Avg. Price	37.00	35.59	35.78
Outstanding restricted share awards, Cancelled, Weighted Avg. Price	45.20	53.86	0
Outstanding restricted share awards, Nonvested at September 30, Weighted Avg. Price	$ 59.72	$ 47.23	$ 40.35

Share-Based Compensation - Additional information (Details) - USD ($)	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Share-Based Compensation
Non-employee director retainer common shares per quarter		900
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	844,029
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost		$ 180,000
Performance-Accelerated Restricted Share Awards
Share-Based Compensation
Stock options outstanding	0
Vesting period	5 years
Pretax compensation expense	$ 4,300,000	4,100,000	$ 4,400,000
Compensation Plan for Non-Employee Directors
Share-Based Compensation
Pretax compensation expense	1,100,000	1,100,000	1,000,000.0
Total share-based compensation cost	1,100,000
Total income tax benefit recognized		1,300,000	1,800,000
Total unrecognized compensation cost related to share-based compensation arrangements	$ 9,600,000
Remaining weighted-average period for recognition of total unrecognized compensation cost	2 years
Compensation Plan for Non-Employee Directors \| Selling, general and administrative expenses
Share-Based Compensation
Total share-based compensation cost	$ 5,400,000	$ 5,200,000	$ 5,400,000

Retirement and Other Benefit Plans - Schedule Of Reconciliation Of Benefit Obligation (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Retirement and Other Benefit Plans
Net benefit obligation at beginning of year	$ 89,800	$ 95,300
Interest cost	3,700	3,400	$ 3,200
Actuarial loss (gain)	11,300	(4,300)
Gross benefits paid	(4,700)	(4,600)
Settlements	0	0
Net benefit obligation at end of year	$ 100,100	$ 89,800	$ 95,300

Retirement and Other Benefit Plans - Schedule Of Reconciliation Of Fair Value Of Plan Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Retirement and Other Benefit Plans
Fair value of plan assets at beginning of year	$ 73,300	$ 65,000
Actual return on plan assets	5,900	2,700
Employer contributions	2,700	10,200
Gross benefits paid	(4,700)	(4,600)
Settlements	0	0
Fair value of plan assets at end of year	$ 77,200	$ 73,300

Retirement and Other Benefit Plans - Schedule Of Funded Status (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018
Retirement and Other Benefit Plans
Funded status at end of year	$ (22,900)	$ (16,500)
Accrued benefit cost	(22,900)	(16,500)
Current liability	(200)	(200)
Noncurrent liability	(22,682)	(16,286)
Accumulated other comprehensive (income)/loss (before tax effect)	49,600	41,900
Net actuarial loss	49,600	41,900
Accumulated other comprehensive (income)/loss (before tax effect)	$ 49,600	$ 41,900

Retirement and Other Benefit Plans - Schedule Of Net periodic benefit cost (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Retirement and Other Benefit Plans
Service cost	$ 0	$ 0	$ 0
Interest cost	3,700	3,400	3,200
Expected return on plan assets	(4,400)	(3,800)	(3,900)
Net actuarial loss	2,100	2,300	2,600
Net periodic benefit cost	1,400	1,900	1,900
Defined contribution plans	7,300	7,100	6,300
Total	$ 8,700	$ 9,000	$ 8,200

Retirement and Other Benefit Plans - Schedule Of Weighted-Average Assumptions Used To Determine The Net Periodic Benefit Cost For Pension Plans (Details)	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Net Periodic Benefit Cost
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Discount rate	4.15%	3.65%	3.25%
Rate of increase in compensation levels
Expected long-term rate of return on assets	6.00%	6.00%	6.25%
Net Periodic Benefit Obligations
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Discount rate	3.05%	4.15%
Rate of increase in compensation levels

Retirement and Other Benefit Plans - Schedule Of Fair Value Of Financial Measurements (Details) - USD ($) $ in Thousands	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 77,200	$ 73,300	$ 65,000
Cash and cash equivalents
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	2,100	2,100
Domestic large capitalization
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	8,800	8,700
Domestic small/mid capitalization
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	2,400	2,700
International funds
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	10,600	10,800
Fixed income funds
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	49,700	45,600
Real estate investment
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	3,600	$ 3,400
Investment funds \| Level 1
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	13,000
Investment funds \| Level 2
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	19,300
Investment funds \| Level 0
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Fair Value of Plan Assets	$ 44,900

Retirement and Other Benefit Plans - Schedule Of Expected Benefit Payments (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Pension Benefits
Expected Employer Contributions - 2020	$ 700
Expected Benefit Payments:
2020	5,800
2021	5,500
2022	5,700
2023	5,800
2024	5,900
2025-2029	30,200
Other Benefits
Expected Employer Contributions - 2020	100
Expected Benefit Payments:
2020	100
2021	100
2022	100
2023	100
2024	100
2025-2029	$ 200

Business Segment Information - Net Sales And Earnings Before Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Segment Reporting Information [Line Items]
Net Sales	$ 236,658	$ 199,766	$ 193,949	$ 182,597	$ 231,086	$ 192,223	$ 174,778	$ 173,495	$ 812,970	$ 771,582	$ 685,740
Consolidated EBIT									110,600	96,800	84,700
Less: interest expense									(8,396)	(8,748)	(4,578)
Earnings before income taxes									102,216	88,023	80,153
Filtration
Segment Reporting Information [Line Items]
Net Sales									325,735	286,800	279,500
Consolidated EBIT									70,100	58,700	52,200
USG
Segment Reporting Information [Line Items]
Net Sales									211,915	214,000	162,400
Consolidated EBIT									52,200	43,200	36,600
Test
Segment Reporting Information [Line Items]
Net Sales									188,394	182,900	160,900
Consolidated EBIT									25,600	23,800	19,500
Technical Packaging
Segment Reporting Information [Line Items]
Net Sales									86,926	87,900	82,900
Consolidated EBIT									5,900	8,100	8,500
Corporate
Segment Reporting Information [Line Items]
Consolidated EBIT									$ (43,200)	$ (37,000)	$ (32,100)

Commitments and Contingencies - Future Aggregate Minimum Lease Payments Under Operating Leases (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Commitments and Contingencies
2020	$ 6,405
2021	5,279
2022	4,592
2023	3,567
2024 and thereafter	10,197
Total	$ 30,040

Capital Leases - Capital Lease Obligations (Details) $ in Thousands	Sep. 30, 2019 USD ($)
Capital Leases
2020	$ 2,518
2021	2,930
2022	3,012
2023	3,094
2024 and thereafter	31,499
Total minimum lease payments	43,053
Less: amounts representing interest	11,241
Present value of net minimum lease payments	31,812
Current portion of capital lease obligations	1,832
Non-current portion of capital lease obligations	$ 29,980

Capital Leases - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
Property, Plant and Equipment, Net	$ 161,470	$ 134,954
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	129,870	$ 115,728
Property, equipment and machinery under capital lease
Property, Plant and Equipment, Net	28,400
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 3,500
Doble facility lease
Lease Expiration Date	2036
NRG and Mayday facility
Lease Expiration Date	2029,
Machinery
Lease Expiration Date	2020

Revenues - Disaggregation of Revenues (Details) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2017
Disaggregation of revenues
Net sales	$ 236,658	$ 199,766	$ 193,949	$ 182,597	$ 231,086	$ 192,223	$ 174,778	$ 173,495	$ 812,970	$ 771,582	$ 685,740
Point in time
Disaggregation of revenues
Net sales									365,137
Over time
Disaggregation of revenues
Net sales									447,833
United States
Disaggregation of revenues
Net sales									582,972	536,700	503,100
International
Disaggregation of revenues
Net sales									229,998
Commercial
Disaggregation of revenues
Net sales									642,822
Government
Disaggregation of revenues
Net sales									170,148
Filtration
Disaggregation of revenues
Net sales									325,735	286,800	279,500
Filtration \| Point in time
Disaggregation of revenues
Net sales									164,224
Filtration \| Over time
Disaggregation of revenues
Net sales									161,511
Filtration \| United States
Disaggregation of revenues
Net sales									274,446
Filtration \| International
Disaggregation of revenues
Net sales									51,289
Filtration \| Commercial
Disaggregation of revenues
Net sales									180,356
Filtration \| Government
Disaggregation of revenues
Net sales									145,379
USG
Disaggregation of revenues
Net sales									211,915	214,000	162,400
USG \| Point in time
Disaggregation of revenues
Net sales									164,126
USG \| Over time
Disaggregation of revenues
Net sales									47,789
USG \| United States
Disaggregation of revenues
Net sales									150,381
USG \| International
Disaggregation of revenues
Net sales									61,534
USG \| Commercial
Disaggregation of revenues
Net sales									207,666
USG \| Government
Disaggregation of revenues
Net sales									4,249
Test
Disaggregation of revenues
Net sales									188,394	182,900	160,900
Test \| Point in time
Disaggregation of revenues
Net sales									36,787
Test \| Over time
Disaggregation of revenues
Net sales									151,607
Test \| United States
Disaggregation of revenues
Net sales									112,358
Test \| International
Disaggregation of revenues
Net sales									76,036
Test \| Commercial
Disaggregation of revenues
Net sales									168,201
Test \| Government
Disaggregation of revenues
Net sales									20,193
Technical Packaging
Disaggregation of revenues
Net sales									86,926	$ 87,900	$ 82,900
Technical Packaging \| Point in time
Disaggregation of revenues
Net sales									0
Technical Packaging \| Over time
Disaggregation of revenues
Net sales									86,926
Technical Packaging \| United States
Disaggregation of revenues
Net sales									45,787
Technical Packaging \| International
Disaggregation of revenues
Net sales									41,139
Technical Packaging \| Commercial
Disaggregation of revenues
Net sales									86,599
Technical Packaging \| Government
Disaggregation of revenues
Net sales									$ 327

Revenues - Reconciliation of ASC 606 to Prior Standards (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

12 Months Ended

Sep. 30, 2019

Jun. 30, 2019

Mar. 31, 2019

Dec. 31, 2018

Sep. 30, 2018

Jun. 30, 2018

Mar. 31, 2018

Dec. 31, 2017

Sep. 30, 2019

Sep. 30, 2018

Sep. 30, 2017

Sep. 30, 2016

Consolidated Balance Sheets

Contract assets

$ 115,310

^[1]

$ 53,034

$ 115,310

^[1]

$ 53,034

Inventories

128,825

135,416

128,825

135,416

Total current assets

495,194

396,023

495,194

396,023

Total assets

1,466,720

1,265,122

1,466,720

1,265,122

Contract liabilities

81,177

^[2]

49,035

81,177

^[2]

49,035

251,635

200,530

251,635

200,530

64,855

64,794

64,855

64,794

640,498

505,712

640,498

505,712

684,741

606,837

684,741

606,837

Total liabilities and shareholders' equity

826,222

759,410

826,222

759,410

$ 671,918

$ 615,109

1,466,720

1,265,122

1,466,720

1,265,122

Consolidated Statements of Operations

Net sales

236,658

$ 199,766

$ 193,949

$ 182,597

231,086

$ 192,223

$ 174,778

$ 173,495

812,970

771,582

685,740

Cost of sales

508,521

490,397

436,918

Total costs and expenses

710,754

683,559

605,587

Earnings before income tax

102,216

88,023

80,153

Income tax expense

21,177

(4,113)

26,450

$ 24,858

$ 20,067

$ 18,797

$ 17,317

$ 28,452

$ 19,019

$ 9,994

$ 34,671

$ 81,039

$ 92,136

$ 53,703

Basic:

$ 0.96

$ 0.77

$ 0.73

$ 0.67

$ 1.10

$ 0.73

$ 0.39

$ 1.34

$ 3.12

$ 3.56

$ 2.08

Diluted:

Consolidated Statements of Comprehensive Income

$ 0.95

$ 0.77

$ 0.72

$ 0.66

$ 1.09

$ 0.73

$ 0.38

$ 1.33

$ 3.10

$ 3.54

$ 2.07

Consolidated Statements of Cash flows

$ 24,858

$ 20,067

$ 18,797

$ 17,317

$ 28,452

$ 19,019

$ 9,994

$ 34,671

$ 81,039

$ 92,136

$ 53,703

Comprehensive income

68,593

87,916

65,678

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

24,858

$ 20,067

$ 18,797

$ 17,317

$ 28,452

$ 19,019

$ 9,994

$ 34,671

81,039

92,136

53,703

Change in assets and liabilities

(9,944)

(10,315)

(17,889)

Net cash provided by operating activities

105,137

$ 93,259

$ 67,340

Effect of the adoption of ASC 606

Consolidated Balance Sheets

Contract assets

^[1]

(39,055)

34,065

(4,990)

(4,990)

^[2]

2,870

2,870

(658)

2,212

(7,202)

Total liabilities and shareholders' equity

(7,202)

(4,990)

Consolidated Statements of Operations

Net sales

(5,598)

Cost of sales

(6,658)

Total costs and expenses

(6,658)

Earnings before income tax

1,060

Income tax expense

255

$ 805

Basic:

$ 0.03

Diluted:

Consolidated Statements of Comprehensive Income

$ 0.03

Consolidated Statements of Cash flows

$ 805

Comprehensive income

805

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

805

Change in assets and liabilities

(805)

Net cash provided by operating activities

Under Prior Accounting

Consolidated Balance Sheets

Contract assets

^[1]

76,255

162,890

490,204

1,461,730

^[2]

84,047

254,505

64,197

642,710

677,539

Total liabilities and shareholders' equity

819,020

$ 1,461,730

1,461,730

Consolidated Statements of Operations

Net sales

807,372

Cost of sales

501,863

Total costs and expenses

704,096

Earnings before income tax

103,276

Income tax expense

21,432

$ 81,844

Basic:

$ 3.15

Diluted:

Consolidated Statements of Comprehensive Income

$ 3.13

Consolidated Statements of Cash flows

$ 81,844

Comprehensive income

69,398