Parker-Hannifin Corp
For the period ended Dec 31, 2025. Filed Jan 30, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Jan 30, 2026
PH$917.79+2.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-07.
0000076334-25-000071
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-01-30.
0000076334-26-000008
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OFThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 126 current paragraphs.
69 unchanged; 44 reworded; 12 added; 10 removed; 1 previous and 1 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (12)
Current report
AND COMPARABLE PERIODS ENDED DECEMBER 31, 2024
Current report
Net sales increased in the first six months of fiscal 2026 due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the first six months of fiscal 2026 by approximately $117 million. The impact of divestiture activity decreased net sales by approximately $146 million during the first six months of fiscal 2026. The impact of the acquisition of Curtis increased net sales by approximately $85 million during the first six months of fiscal 2026.
Current report
The effective tax rate for the comparable prior-year periods was lower than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation, lower taxable gain on divestitures than gain under accounting principles generally accepted in the United States of America ("GAAP"), and foreign-derived intangible income, which were partially offset by U.S. state and local taxes and taxes related to international activities.
Current report
Other expense (income), net
Current report
We expect that our cash and cash equivalents, cash flows from operations, availability under our commercial paper program, and access to capital markets will be sufficient to meet these liquidity needs for the next twelve months and the foreseeable future.
Current report
At December 31, 2025, we had cash and cash equivalents totaling $427 million, of which $371 million was held by our foreign subsidiaries. We intend to repatriate certain foreign earnings, which may result in non-federal U.S. or foreign tax liabilities. All other undistributed foreign earnings are considered to be permanently reinvested.
Current report
Net cash (used in) provided by investing activities decreased by $1.6 billion in the first six months of fiscal 2026 compared to the first six months of fiscal 2025. The decrease was primarily attributable to $1.0 billion in cash used for the Curtis acquisition and lower proceeds from sale of businesses in fiscal 2026. Proceeds from sale of businesses in fiscal 2025 included net proceeds of $621 million related to the divestitures of the composites and fuel containment business and the non-core filtration business.
Current report
•Aggregate principal payment of $500 million related to the maturity of medium-term notes during fiscal 2025.
Current report
To fund short-term liquidity needs, we utilize a commercial paper program that is supported by our revolving credit agreement.
Current report
On December 10, 2025, we entered into a 364-Day Term Loan Agreement and a Three-Year Term Loan Agreement, which provide for senior unsecured delayed draw term loan facilities in aggregate principal amounts of $5.25 billion and $2.50 billion, respectively. Proceeds from the Filtration Group Credit Facilities, if and when drawn, will be used to finance a portion of the consideration for the Company's proposed acquisition of Filtration Group. The Filtration Group Credit Facilities mature 364 days and three years, respectively, following the date of the initial funding of all or a portion of the applicable delayed draw term loan. As of December 31, 2025, we have not borrowed any funds under the Filtration Group Credit Facilities.
Removed paragraphs (10)
Previous report
AND COMPARABLE PERIOD ENDED SEPTEMBER 30, 2024
Previous report
Within Europe, sales in the current-year quarter decreased primarily due to lower sales in the energy market related to the timing of customer capital projects, partially offset by higher user demand in the in-plant and industrial equipment and transportation markets.
Previous report
Within Latin America, sales in the current-year quarter remained flat primarily due to higher demand within the energy market, offset by lower demand from end users across the transportation, in-plant and industrial equipment and off-highway markets.
Previous report
Diversified Industrial Segment backlog, as of September 30, 2025, decreased from the comparable prior-year quarter primarily due to the prior year divestiture of composites and fuel containment business within the North America businesses. Excluding the impact of the prior year divestiture activity, backlog remained relatively flat compared to the prior-year quarter.
Previous report
Net cash used in investing activities increased for the first three months of fiscal 2026 compared to the first three months of fiscal 2025, primarily driven by a $1.0 billion increase in cash paid for acquisitions, net of cash acquired related to the acquisition of Curtis.
Previous report
Cash, comprised of cash and cash equivalents, marketable securities and other investments, includes $384 million and $344 million held by the Company's foreign subsidiaries at September 30, 2025 and June 30, 2025, respectively. The Company does not permanently reinvest certain foreign earnings. The distribution of these earnings could result in non-federal U.S. or foreign taxes. All other undistributed foreign earnings remain permanently reinvested.
Previous report
On August 21, 2025, the authorization limit to sell short-term commercial paper notes was increased from $3.0 billion to $3.75 billion. As of September 30, 2025, $2.8 billion of commercial paper notes were outstanding, and the largest amount of commercial paper notes outstanding during the current-year quarter was $3.1 billion.
Reworded paragraphs (44)
Previous wording
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2025
Current wording
FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2025
Previous wording
The Win Strategy 3.0 is Parker's business system that defines the goals and initiatives that create responsible, sustainable growth and enable Parker's long-term success. It works with our purpose, which is a foundational element of The Win Strategy, to engage team members and create responsible and sustainable growth. Our shared values shape our culture and our interactions with stakeholders and the communities in which we operate and live.
Current wording
The Win Strategy is Parker's business system that defines the goals and initiatives that create responsible, sustainable growth and enable Parker's long-term success. It works with our purpose, which is a foundational element of The Win Strategy, to engage team members and create responsible and sustainable growth. Our shared values shape our culture and our interactions with stakeholders and the communities in which we operate and live.
Previous wording
•successfully executing The Win Strategy initiatives relating to engaged people, premier customer experience, profitable growth and financial performance;
Current wording
•successfully executing The Win Strategy initiatives relating to engaged people, customer experience, profitable growth and financial performance;
Previous wording
•creating a culture of empowerment through our values, inclusion and diversity, accountability and teamwork.
Current wording
•creating a culture of empowerment through our values, inclusion, accountability and teamwork.
Previous wording
Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty, geopolitical risks and public health crises depends on future developments that remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.
Current wording
Over the long term, the extent to which our business and results of operations will be impacted by global economic and political uncertainty and geopolitical risks depends on future developments that remain uncertain. We will continue to monitor the global environment and manage our business with the goal to minimize unfavorable impacts on operations and financial results.
Previous wording
Net sales increased in the current-year quarter due to higher sales in the Aerospace Systems Segment, partially offset by lower sales in the Diversified Industrial Segment. The effect of currency exchange rate changes increased net sales during the current-year quarter by approximately $33 million. The impact of prior-year divestiture activity decreased net sales by approximately $108 million during the current-year quarter. The impact of the acquisition of Curtis increased net sales by approximately $11 million during the current-year quarter.
Current wording
Net sales increased in the current-year quarter due to higher sales in both the Aerospace Systems and Diversified Industrial Segments. The effect of currency exchange rate changes increased net sales during the current-year quarter by approximately $84 million. The impact of prior-year divestiture activity decreased net sales by approximately $38 million during the current-year quarter. The impact of the acquisition of Curtis increased net sales by approximately $74 million during the current-year quarter.
Previous wording
Gross profit margin (calculated as net sales minus cost of sales, divided by net sales) increased in the current-year quarter due to higher margins in the Diversified Industrial Segment primarily due to favorable product mix, cost containment initiatives and benefits from prior-year business realignment activities.
Current wording
Gross profit margin (calculated as net sales minus cost of sales, divided by net sales) increased in the current-year quarter and first six months of fiscal 2026 due to higher margins in both segments primarily due to favorable product mix, cost containment initiatives and benefits from prior-year business realignment activities.
Previous wording
Cost of sales also included business realignment charges of $9 million and $5 million for the current and prior-year quarter, respectively.
Current wording
Cost of sales also included business realignment and acquisition integration charges of $9 million and $12 million for the current and prior-year quarter, respectively, and $18 million and $17 million for the first six months of fiscal 2026 and 2025, respectively.
Previous wording
Selling, general and administrative expenses("SG&A") increased in the current-year quarter primarily due to higher acquisition-related expenses and stock compensation expense, partially offset by lower research and development costs.
Current wording
Selling, general and administrative expenses("SG&A") increased in the current-year quarter and first six months of fiscal 2026 primarily due to higher acquisition-related expenses, stock-based compensation expense, research and development expenses, and intangible asset amortization.
Previous wording
SG&A also included business realignment and acquisition integration charges of $12 million and $10 million for the current and prior-year quarter, respectively.
Current wording
SG&A also included business realignment and acquisition integration charges of $5 million and $16 million for the current and prior-year quarter, respectively, and $17 million and $26 million for the first six months of fiscal 2026 and 2025, respectively.
Previous wording
Interest expense decreased during the current-year quarter primarily due to lower average interest rates and lower average debt outstanding.
Current wording
Interest expense increased during the current-year quarter primarily due to higher average debt outstanding, and decreased in the first six months of fiscal 2026 primarily due to lower average debt outstanding and lower average interest rates.
Previous wording
Effective tax rate for the current-year quarter of fiscal 2026 was greater than the U.S. Federal statutory rate of 21 percent due to U.S. state and local taxes and taxes related to international activities, which were partially offset by tax benefits from share-based compensation and foreign-derived intangible income.
Current wording
Effective tax rate for the current-year quarter of fiscal 2026 was less than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation, U.S. Federal tax credits, and foreign-derived intangible income, which were partially offset by taxes related to international activities and U.S. state and local taxes.
Previous wording
The effective tax rate for the comparable prior-year period was lower than the U.S. Federal statutory rate of 21 percent due to tax benefits from share-based compensation and foreign-derived intangible income, which were partially offset by U.S. state and local taxes and taxes related to international activities.
Current wording
The effective tax rate for the first six months of fiscal 2026 was greater than the U.S. Federal statutory rate of 21 percent due to taxes related to international activities and U.S. state and local taxes, which were partially offset by tax benefits from share-based compensation and foreign-derived intangible income.
Previous wording
The fiscal 2026 effective tax rate is expected to be approximately 22.5 percent.
Current wording
The fiscal 2026 effective tax rate is expected to be approximately 22 percent.
Previous wording
The Company operates in two reportable business segments: Diversified Industrial and Aerospace Systems. The business segment information presents sales and operating income on a basis that is consistent with the manner in which the Company's various businesses are managed for internal review and decision-making.
Current wording
We operate in two reportable business segments: Diversified Industrial and Aerospace Systems. The business segment information presents sales and operating income on a basis that is consistent with the manner in which our various businesses are managed for internal review and decision-making.
Previous wording
The Diversified Industrial Segment operations experienced the following percentage changes in net sales in the current-year period versus the comparable prior-year period:
Current wording
The Diversified Industrial Segment operations experienced the following percentage changes in net sales in the current-year periods versus the comparable prior-year periods:
Previous wording
Diversified Industrial Segment sales decreased $13 million from the prior-year quarter. The effect of the Curtis acquisition increased sales by approximately $11 million in the current-year quarter. The effect of changes in currency exchange rates increased sales by approximately $25 million in the current-year quarter. The impact of divestiture activity decreased sales by approximately $108 million in the current-year quarter. Excluding the effects of the acquisition, changes in currency exchange rates and divestiture activity, sales increased $59 million from the prior-year quarter.
Current wording
Diversified Industrial Segment sales increased $215 million and $202 million from the prior-year quarter and first six months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $74 million and $85 million in the current-year quarter and first six months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $69 million and $93 million in the current-year quarter and first six months of fiscal 2026, respectively. The impact of divestiture activity decreased sales by approximately $38 million and $146 million in the current-year quarter and first six months of fiscal 2026, respectively. Excluding the effects of the acquisition, changes in currency exchange rates and divestiture activity, sales increased $110 million and $170 million from the prior-year quarter and first six months of fiscal 2025, respectively.
Previous wording
North America businesses - Sales decreased $56 million from the prior-year quarter. The effect of the Curtis acquisition increased sales by approximately $6 million in the current-year quarter. The effects of divestiture activity decreased sales by approximately $108 million in the current-year quarter. Currency exchange rates did not materially impact sales in the current-year quarter. Excluding the effects of the acquisition, divestiture activity and changes in currency exchange rates, sales in the North America businesses increased $45 million in the current-year quarter, which was primarily due to higher demand from end users in the in-plant and industrial equipment, HVAC and refrigeration and aerospace and defense markets, partially offset by lower demand from end users in the transportation market.
Current wording
North America businesses - Sales increased $58 million from the prior-year quarter and remained flat when compared to the first six months of fiscal 2025. The effect of the Curtis acquisition increased sales by approximately $41 million and $47 million in the current-year quarter and first six months of fiscal 2026, respectively. The effects of divestiture activity decreased sales by approximately $38 million and $146 million in the current-year quarter and first six months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $7 million in both the current-year fiscal quarter and first six months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition, divestiture activity and changes in currency exchange rates, sales in the North America businesses increased $48 million and $94 million in the current-year quarter and first six months of fiscal 2026, respectively. In the current-year quarter and first six months of fiscal 2026, the increase in sales is primarily due to higher demand from end users in the in-plant and industrial equipment, aerospace and defense, HVAC and refrigeration and off-highway markets, partially offset by lower demand from end users in the transportation and energy markets.
Previous wording
International businesses - Sales increased $43 million from the prior-year quarter. The effect of the Curtis acquisition increased sales by approximately $5 million in the current-year quarter. The effect of changes in currency exchange rates increased sales by approximately $24 million in the current-year quarter. Excluding the effects of the acquisition and changes in currency exchange rates, sales in the International businesses increased $14 million in the current-year quarter primarily due to higher sales in the Asia Pacific region, partially offset by a decrease in sales in Europe.
Current wording
International businesses - Sales increased $157 million and $200 million from the prior-year quarter and first six months of fiscal 2025, respectively. The effect of the Curtis acquisition increased sales by approximately $33 million and $38 million in the current-year quarter and first six months of fiscal 2026, respectively. The effect of changes in currency exchange rates increased sales by approximately $62 million and $86 million in the current-year quarter and first six months of fiscal 2026, respectively. Excluding the effects of the Curtis acquisition and changes in currency exchange rates, sales in the International businesses increased $62 million and $76 million in the current-year quarter and first six months of fiscal 2026, respectively, primarily due to higher sales in the Asia Pacific region, where we experienced higher demand within the electronics and semiconductor and in-plant and industrial equipment markets, partially offset by lower demand from end users in the transportation market. During the current-year quarter, sales also increased due to higher sales in Europe, primarily due to higher demand across the in-plant and industrial equipment and transportation and off-highway markets.
Previous wording
Diversified Industrial Segment operating margin increased during the current-year quarter, in both the North America and International businesses, primarily due to favorable product mix and benefits from prior-year business realignment activities. Within the North America businesses operating margins also benefitted from operational efficiencies, partially offset by an increase in material costs. Operating margins in the International businesses also increased due to price increases and cost containment initiatives.
Current wording
Diversified Industrial Segment operating margin increased during the current-year quarter and first six months of fiscal 2026 in both the North America and International businesses primarily due to favorable product mix, price increases, and benefits from prior-year business realignment activities, partially offset by an increase in material costs.
Previous wording
In both periods, business realignment and acquisition integration charges primarily related to business realignment activities. The business realignment charges primarily consist of severance costs related to actions taken under the Company's simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. Business realignment charges within the International businesses were primarily incurred in Europe.
Current wording
In both periods, business realignment and acquisition integration charges primarily related to business realignment activities. The business realignment charges primarily consist of severance costs related to actions taken under our simplification initiative aimed at reducing organizational and process complexity, as well as plant closures. Business realignment charges within the International businesses were primarily incurred in Europe.
Previous wording
We anticipate that cost savings realized from the workforce reduction measures taken in the first three months of fiscal 2026 will not materially impact operating income in fiscal 2026 and 2027. We expect to continue to take actions necessary to appropriately structure the operations of the Diversified Industrial Segment. We currently anticipate incurring approximately $55 million of additional business realignment charges in the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.
Current wording
We anticipate that cost savings realized from the workforce reduction measures taken in the first six months of fiscal 2026 will not materially impact operating income in fiscal 2026 and will increase operating income by approximately one percent in fiscal 2027. We expect to continue to take actions necessary to appropriately structure the operations of the Diversified Industrial Segment. We currently anticipate incurring approximately $40 million of additional business realignment charges in the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.
Previous wording
Diversified Industrial Segment backlog decreased from the June 30, 2025 amount of $3.7 billion primarily due to shipments exceeding orders in the North America businesses.
Current wording
Diversified Industrial Segment backlog, as of December 31, 2025, increased from both the comparable prior-year quarter and the June 30, 2025 balance of $3.7 billion primarily due to orders exceeding shipments in both the North America and International businesses.
Previous wording
Aerospace Systems Segment sales increased in the current-year quarter primarily due to higher volume in the commercial OEM and aftermarket, as well as the defense OEM market segment.
Current wording
Aerospace Systems Segment sales increased in both the current-year quarter and first six months of fiscal 2026 primarily due to higher volume in the commercial OEM and aftermarket, as well as the defense OEM market segment.
Previous wording
Aerospace Systems Segment operating margin increased during the current-year quarter due to higher sales volume, aftermarket profitability, as well as benefits from cost containment initiatives.
Current wording
Aerospace Systems Segment operating margin increased during the current-year quarter and first six months of fiscal 2026 due to higher sales volume, aftermarket profitability, as well as benefits from cost containment initiatives.
Previous wording
Within the Aerospace Systems Segment, we incurred business realignment and acquisition integration charges of $5 million in both the current and prior-year quarter. In both periods, these charges primarily related to acquisition integration activities. We do not expect to incur material business realignment or acquisition integration charges for the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.
Current wording
Within the Aerospace Systems Segment, business realignment and acquisition integration charges were immaterial during the current-year quarter and first six months of fiscal 2026. During the prior-year quarter and first six months of fiscal 2025, business realignment and acquisition integration charges were $7 million and $12 million, respectively, and primarily related to acquisition integration activities. We do not expect to incur material business realignment or acquisition integration charges for the remainder of fiscal 2026. However, continually changing business conditions could impact the ultimate costs we incur.
Previous wording
Corporate general and administrative expenses primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.
Current wording
Corporate general and administrative expenses in both the current-year quarter and first six months of fiscal 2026 primarily included salaries, benefits and incentive compensation expense, professional service fees, information technology, charitable contributions and other discretionary spending.
Previous wording
A summary of cash flows follows:
Current wording
A summary of cash flows is as follows:
Previous wording
Net cash provided by operating activities increased $38 million for the first three months of fiscal 2026 compared to the first three months of fiscal 2025, primarily driven by higher net income adjusted for non-cash items, such as depreciation, amortization, stock-based compensation expense and deferred income taxes. This was partially offset by changes in working capital relating to accounts receivable and inventories. We continue to focus on managing inventory and other working capital requirements.
Current wording
Net cash provided by operating activities decreased $35 million for the first six months of fiscal 2026 compared to the first six months of fiscal 2025. The decrease was primarily driven by higher cash tax payments and increased working capital requirements, specifically within accounts receivable and inventory, which more than offset the higher net income adjusted for non-cash items (including depreciation, amortization, stock-based compensation expense, deferred income taxes and gains on sale of businesses). We continue to focus on managing inventory and other working capital requirements.
Previous wording
•Days sales outstanding relating to trade accounts receivable was 52 days at September 30, 2025, 51 days at June 30, 2025 and 52 days at September 30, 2024.
Current wording
•Days sales outstanding relating to trade accounts receivable was 49 days at December 31, 2025, 51 days at June 30, 2025 and 48 days at December 31, 2024.
Previous wording
•Days supply of inventory on hand was 93 days at September 30, 2025, 82 days at June 30, 2025 and 91 days at September 30, 2024.
Current wording
•Days supply of inventory on hand was 95 days at December 31, 2025, 82 days at June 30, 2025 and 89 days at December 31, 2024.
Previous wording
Net cash provided by (used in) financing activities for the first three months of fiscal 2026 and 2025 were impacted by the following factors:
Current wording
Net cash used in financing activities for the first six months of fiscal 2026 and 2025 were impacted by the following factors:
Previous wording
•Net commercial paper borrowings of $1.1 billion in the first three months of fiscal 2026 compared to net commercial paper repayments of $377 million in the first three months of fiscal 2025.
Current wording
•Net commercial paper borrowings of $595 million in the first six months of fiscal 2026 compared to net commercial paper repayments of $515 million in the first six months of fiscal 2025.
Previous wording
•Principal payments totaling $40 million related to borrowings under a term loan facility in the first three months of fiscal 2025.
Current wording
•Principal payments totaling $490 million related to borrowings under a term loan facility in the first six months of fiscal 2025.
Previous wording
•Repurchases under the Company's share repurchase program amounted to 0.6 million common shares for $475 million during the first three months of fiscal 2026, compared to 0.1 million common shares for $50 million during the first three months of fiscal 2025.
Current wording
•Repurchases under our share repurchase program amounted to 0.7 million common shares for $550 million during the first six months of fiscal 2026, compared to 0.2 million common shares for $100 million during the first six months of fiscal 2025.
Previous wording
As of September 30, 2025, the Company had a line of credit totaling $3.75 billion through a multi-currency revolving credit agreement with a group of banks, of which $0.9 billion was available for borrowing as of September 30, 2025. The multi-currency revolving credit agreement was amended on August 21, 2025, to increase the total line of credit by $750 million to $3.75 billion. Advances from the credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. The credit agreement supports our commercial paper program, and issuances of commercial paper reduce the amount of credit available under the credit agreement. The credit agreement expires in June 2028; however, the Company has the right to request a one-year extension of the expiration date on an annual basis, which may result in changes to the current terms and conditions of the credit agreement. The credit agreement requires the payment of an annual facility fee, the amount of which is dependent upon the Company’s credit ratings. Although a lowering of the Company’s credit ratings would increase the cost of future debt, it would not limit the Company’s ability to use the credit agreement, nor would it accelerate the repayment of any outstanding borrowings.
Current wording
In August 2025, we amended our revolving credit agreement to increase the total line of credit to $3.75 billion, and authorized a corresponding increase in the commercial paper program size to $3.75 billion. The revolving credit agreement expires in June 2028; however, we have the right to request a one-year extension of the expiration date. Advances from the credit agreement can be used for general corporate purposes, including acquisitions, and for the refinancing of existing indebtedness. Issuances of commercial paper reduce the amount of credit available under the revolving credit agreement. As of December 31, 2025, there were no borrowings outstanding under the revolving credit agreement, and commercial paper notes outstanding were $2.4 billion. Taking into account outstanding commercial paper notes, $1.4 billion was available for borrowing under the credit agreement as of December 31, 2025.
Previous wording
We primarily utilize unsecured medium-term notes and senior notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term. Refer to the Cash flows from financing activities section above and Note 13 to the consolidated financial statements for further discussion.
Current wording
We primarily utilize unsecured medium-term notes and senior notes to meet our financing needs and we expect to continue to borrow funds at reasonable rates over the long term.
Previous wording
The Company’s credit agreement and indentures governing certain debt securities contain various covenants, the violation of which would limit or preclude the use of the credit agreements for future borrowings, or might accelerate the maturity of the related outstanding borrowings covered by the indentures. Based on the Company’s rating level at September 30, 2025, the most restrictive financial covenant provides that the ratio of debt to debt-shareholders' equity cannot exceed 0.65 to 1.0. At September 30, 2025, the Company's debt to debt-shareholders' equity ratio was 0.43 to 1.0. We are in compliance and expect to remain in compliance with all covenants set forth in the credit agreement and indentures.
Current wording
Our credit agreements and indentures governing certain debt securities contain various covenants. Violation of these covenants would limit or preclude the use of the credit agreements for future borrowings or could accelerate the maturity of the related outstanding borrowings. Based on our rating level at December 31, 2025, the most restrictive financial covenant requires that the ratio of debt to debt-shareholders' equity not exceed 0.65 to 1.0. As of December 31, 2025, we are in compliance with all covenants, with a ratio of 0.41 to 1.0. We expect to remain in compliance with all covenants set forth in our credit agreements and indentures.
Previous wording
Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update the Company's credit ratings as events occur. At September 30, 2025, the long-term credit ratings assigned to the Company's senior debt securities by the credit rating agencies engaged by the Company were as follows:
Current wording
Our goal is to maintain an investment-grade credit profile. The rating agencies periodically update our credit ratings as events occur. At December 31, 2025, the long-term credit ratings assigned to our senior debt securities were as follows:
Previous wording
We are actively monitoring our liquidity position and remain focused on managing our inventory and other working capital requirements. We are targeting 2.5 percent of sales for capital expenditures for 2026 and have a long-term target of two percent. We will continue to prioritize capital expenditures related to safety, productivity and strategic investments. We believe that cash generated from operations and our commercial paper program will satisfy our operating needs for the foreseeable future.
Current wording
We are targeting 2.5 percent of sales for capital expenditures for the remainder of fiscal 2026 and have an annual long-term target of 2.0 percent. We will continue to prioritize capital expenditures related to safety, productivity and strategic investments.
Showing the first 40 of 44 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Refer to the cash flows from financing activities section below and Note 13 to the consolidated financial statements for further discussion.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Within the Asia Pacific region, sales in the current-year quarter increased primarily due to higher demand within the electronics and semiconductor market, partially offset by lower demand from end users in the transportation market.