Good morning, ladies and gentlemen. Welcome to the Fourth Quarter and Fiscal Year 2012 Parker Hannifin Corporation Earnings Conference Call. My name is Chris, and I will be your conference moderator for today. Presently, all participants are in a listen-only mode. Later, we will facilitate a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. And at this time, I would now like to turn the conference over to your presenter for today, Ms. Pamela Huggins, Vice President and Treasurer. Ma’am, you may proceed.

Thanks, Chris. Good morning, everyone. This is Pam Huggins speaking just as Chris just mentioned. I’d like to welcome you to Parker Hannifin’s fourth quarter and full year 2012 earnings release teleconference. Joining me today is Chairman, Chief Executive Officer and President, Don Washkewicz; and Executive Vice President and Chief Financial Officer, Jon Marten. For those of you who wish to do so, you can follow today’s presentation with the PowerPoint slides that have been presented on Parker’s website at www.phstock.com. For those of you not on the line, the slides will remain posted on the company’s Investor Information website at the same website one-year after today’s call. At this time, reference slide number two in the slide deck which is the Safe Harbor disclosure statement addressing forward-looking statements. And again, just to remind you, if haven’t already done so, please take note of this statement in its entirety. Slide number three, this slide as required indicates that in cases where non-GAAP numbers have been used they’ve been reconciled to the appropriate GAAP numbers and are posted on Parker’s website again at phstock.com. To cover the agenda today, slide four, the call will be in four parts. First, Don Washkewicz, Chairman, Chief Executive Officer and President will provide highlights for the quarter and for the full year. Second, I’ll provide a review including key performance measures of the fourth quarter and full year fiscal year 2012, concluding with the guidance for next year fiscal year 2013. The third part of the call will consist of our standard Q&A session. And for the fourth part of the call today, Don will close with some final comments. At this time, I’ll turn it over to Don and ask that you refer to slide number five titled Fourth Quarter and Full Year Fiscal Year ‘12 highlights.

Thanks, Pam, and welcome to everyone on the call. We’re certainly very pleased to report our results following a strong fourth quarter and another record year for the company. I’ll start-off by taking a moment to point out some of the highlights and some of the records for the quarter and then I’m going to follow-up and talk a little bit about the full year. So, first of all, the fourth quarter sales were a record at $3.4 billion, we’re really pleased with the level of activity there that we’re able to bring in the quarter. Net income for the quarter was $302 million or $1.96 per share on a diluted basis and we’re certainly pleased with that, and that was ahead of the street consensus expectations. The margins were strong 15.5% that also will go down in the record books as a record for the fourth quarter. Cash flow was strong. We generated over $0.5 billion in operating cash flow in the quarter, I can remember years when we didn’t generate $0.5 billion. So this is pretty exciting for the company. We also -- so those are some of the quarter highlights, for the year then we closed out the fiscal year for Parker with a number of records as well. That includes the record sales of $13.1 billion that was up 6.5%, just and I might want to point out that most all of that was organic growth in a very tough economic environment out there. Total segment operating margin, which is really a highlight for the year was a record exceeding 15% and that was the first time in our history and for those of you that have been tracking us for a number of years, you’ll remember 10 years ago, when we launched the Win Strategy,…

Thanks Don. Please reference slide number six and I’ll begin by addressing earnings per share for the quarter. Fully diluted earnings per share for the quarter came in at $1.96, just as Don said, exceeding the mid-point of the guidance and the mean of the street expectations. This is an increase of $0.17 or 9% versus the $1.79 from the same quarter a year ago. For the full year, fiscal year 2012, earnings came in at $1.7 -- $7.45 and this compares to $6.37 for fiscal year 2011 and this is the $1.08 that Don referenced as well or 17% increase. So now moving to the next slide, slide number seven. Just laying out the components of the $0.17 increase in earnings per share on the segment basis for the fourth quarter. The $1.79 to the $1.96. The puts and takes are as follows. Segment operating income added $0.12 and this is the result of increased performance in industrial North America Aerospace and Climate & Industrial Controls. And for the most part Industrial North America, the strength that we saw there was mostly offset by Industrial international weakness. Below segment operating income or what we refer to as below the line items, earnings per share were impacted favorably by $0.08 and this was mainly due to the other line item and this is the result of favorable currency and this currency just not to be confused with translation or is more on the transactional side. Higher taxes impacted earnings per share by $0.16, mainly due to a higher proportion of sales domestically this year. With a higher tax rate and the favorable resolution of prior year tax filings in fiscal year 2011. Non-controlling interest and less shares outstanding impacted earnings per share favorably by $0.01 and $0.12, respectively. Moving to…

Thank you. (Operator Instructions) And our first question comes from the line of Nathan Jones from Stifel Nicolaus. You may proceed.

Good morning, Don, Jon, Pam.

Good morning, Nathan.

Good morning.

Can you talk about -- I’m thinking about the incremental margins going forward. As you generally get to the peak of a cycle or as revenue growth starts to flatten out, you obviously see deteriorating incremental margins and you got down into the mid teens at the top of the loss cycle about 22% this year. How are you thinking about your ability to keep those incremental margins higher than they were during the last cycle?

Well, Nathan, Jon, here. Our guidance by our math shows us in the high teens right now for the incremental margins. Normally, at this stage given the macro environment and what we’re seeing in terms of our topline growth, we’re feeling really good about our incremental margins in the high teens. One point to really try to focus on here is that we’re seeing international growth basically in our guidance at zero. With us being at a 4% growth rate, our incremental margins at 18%. If you go back and you look at history is, it has been very, very good record. One other point to make to you, Don just talked about and Pam did too, that in FY ‘12 for the very first time in the history of the company, we hit an operating income level of 15.2%. We’ve been striving for that 15.2% for 10 years. Now, our guidance for next year indicates, as Pam said, a 15.3% number here. So again, we’re looking to really drive incremental margins through, for making those bottom line numbers. I think that given the very tough macro environment, we’re all very, very proud of what we’ve been -- actually been able to accomplish here.

And if I could just ask a question about Industrial and international, mid-point of guidance areas for flat revenue year-to-year, can you kind of break that down a little bit more by geography, sort of what you’re expecting out of Europe versus other parts of the world?

Yeah. Just in terms of the international look, just to start out here and Pam will give us some detail here. We have got, right now on the topline a 0% growth. We’re -- as Don indicated, stabilizing in all of our international markets. Don indicated that back in April and that’s certainly what we’re seeing right now for the last -- throughout the quarter and through the last four months. But when you look at the geographies internationally, we get a different picture here. So Pam, why don’t you give us some color on that?

Well. Nathan, I think just to drill in a little bit and to back up for a moment. But to talk about the guidance and what’s going to happen. I mean, obviously we’ve seen some softness in Europe in the latter part of this year. So as we head into the next year, we’re going to continue to see that in the first half okay. But we really are projecting some growth in the second half. And when you really look at that by region, it’s really -- Latin America is starting to show some improvement here at the end. But Latin America is a very small part of the business for Parker overall. So the growth is really going to come from Europe as well as Asia in the second half. And Asia is probably going to be a little higher than Europe. But as you well know, Europe makes up the majority of the international segment. So, yeah, we have growth forecasted in the second half for both of those regions.

Okay. And just on the increased pension expense. Is that going to require you to make a cash contribution to the pension fund? And what’s the level of the funding level at the moment?

Now that’s a very good question, Nathan. Pension, we have always been on a funding level above 80%. As you well know, there are some restrictions that take place. If you’re not above 80% and we have always had a goal to be above that and we still are above that. But we will take the opportunity probably to increase the contribution in fiscal year 2013. If you go back, 2011 we made a contribution, 2013 we did not. So we will probably make a contribution in line with what we’ve made in the past.

Okay. Thanks very much.

Thank you.

The next question comes from the line of Jeff Hammond with KeyBanc. You may proceed.

Hey, good morning. Just on the revenue ranges, can you give us a sense either in total or within the segments how you’re thinking about organic growth? So if we adjust for the acquisitions you’ve announced and FX headwind, I guess FX particularly within international.

Yeah. And you’re speaking about guidance, right, Jeff?

Yeah. Yeah.

Yeah. Well, as you can see at the mid-point, we’re really forecasting about a 4% revenue growth. However, acquisitions account for about 2%, almost 2.5% of acquisitions. And then of course we have the currency headwinds that we have to deal with, which is almost 1.5%. So organic growth really for fiscal year 2013, it’s projected to be around 3%.

Okay. Perfect. And then can you -- Don, you mentioned last quarter buyback and wanting to -- and certainly having the capacity to be pretty active. It looks like in the fourth quarter you did about $125 million. How are you thinking about buyback relative to the comments you made last quarter?

Well. Last quarter, as you may recall, we had the authority to buyback basically as much as we wanted shares. And based on the price level that it was at, we did take advantage of that. And as you said, we did $123 million in the quarter. The other thing we did that you may not be aware of it. I’m not sure we announced it last quarter but we did raise the 10b5-1 from $20 million at quarter to $50 million at quarter. So we’re doing $200 million a year under 10b5-1, where we were $80 million in the past. So that’s a change that we did make. So, for the total year we did $455 million roughly. The year before fiscal ‘11, we did $693 million. I think that it would be safe to say we are going to do more, especially with the depressed share price that we have now. There was a period of time here that we were in a blackout. You probably are aware and the blackout that we have, so we could not do share repurchase in the quarter or we would have done a lot more. And I think I’ve explained this in the past that we look at Parker stock like we do any other investment. When you do a discounted cash flow and we start, at the full value being $105 and then down to wherever their current market price is as being the other extreme. And so when we see the prices where they’re at today, we’re very anxious to do more share repurchase and it certainly fits our DCF model to do that. So you can expect more next year. I definitely think we have the capacity to do quite a bit more. And this would be a…

And just to be clear, the guidance doesn’t reflect any buyback or it reflects that $200 million 10b5?

No. There’s zero buyback reflected in the guidance.

Okay. Thanks.

Thanks, Jeff.

Next question comes from the line of Alex Blanton with Clear Harbor. You may proceed.

Excuse me. Thank you. Going back to the -- Pam, going back to the guidance for next year, you gave us the assumptions on what your sales would be and your margins and so on. But you have not given us your assumptions about the different economies in the world and what they’re going to be doing, whether or not you’re assuming any kind of a recession in the U.S. or not. Could you just go over that? What’s built into that, so we can get an idea of how to compare your guidance with our own assumptions?

Maybe, I can make a couple of comments on some of the markets in the regions and what have you, Alex. First of all, as you can see we’re expecting a better second half than the first half. We’ve heard -- and again, some of this is based on just feedback we’re getting from the various regions and our people in the various regions. We think that the comments that you’ve been hearing about China, probably helping support their economy there because they’ve ripped it back down into a 7% growth rate. I think they’re going to try to move that up. We’re seeing some very early signs of that in China. And I think that being a big part of that Asian economy, I think we’re going to see -- probably not a whole lot in this first half. But we’re thinking in the second half probably see a little bit improvement in that region of the world. Likewise, you’ve heard a lot recently about euro support. That hopefully, I don’t think anything will happen short-term. It’s in disarray over there, obviously with all the different countries having different issues as far as their debt levels and what have you. But I think Europe is right at the bottom now. Any improvement there probably would be coming later in our calendar year, heading into the second half as well. I just think that there’s going to be a little bit of a paralysis here until the elections are over. I think depending on the results of the elections, I think that could bode well for the second half as well. If you look at the PMIs and I was looking at those yesterday. Most of those now are below 50, that doesn’t mean we’re in recession necessarily but it means that the global markets are slowing. I think the global PMI now is around 49 or just under 49. So you’re still growing until you get down to about 42 by definition of that metric. So we’re still okay there. U.S. is still, is right around 50, 49 and change, eurozone is flat around 45. So you can see they’re, they’re in the worst shape of all the regions for us and China, I think, dropped just a little bit on the PMI down to about 48.

So you’re assuming that we muddle through here and don’t go over the fiscal cliff?

That’s what kind of we’re looking at. Yeah, we’re looking at no disaster between now and the end of the calendar year that would be our first half, with a little bit of a pick up in the second half going into the second half of our fiscal. That’s kind of what we’re looking at. If you looked at the numbers that we just pasted and we posted international at down 9% on the order trend, the order numbers. That down 9% reflects Europe down 15% but it also reflects Latin America up 7% and Asia up 1%. So there is, as you can see, there’s a little bit of sign here especially in Latin America, now that’s not a huge region for us but it’s still a positive sign and Asia being plus 1% on a 312, compares in the last three months orders compared to last year the same three. So that would be a little glimmer of hope that that trend hopefully will continue going forward as well.

Okay. Thank you.

Alex, another -- one other thing is our backlog is up 1.5%. So, we’re -- again that helps us see through this first half of our fiscal year as well. I can come back later, maybe we can talk if there is questions on some of the markets that we see that are stronger or weaker. We can talk a little bit more about those as well.

Okay. A couple of quick ones. First, the pension expense comes in what quarter?

It comes across all four quarters, Alex.

Okay.

You can pretty much evenly divide it between four quarters.

Good. And finally, the incremental margin in the North American industrial in the fourth quarter was 37.8%.

Right.

What was the reason for that price increase, efficiency gains, just what was it, mix, whatever?

Alex, Jon here. In the fourth quarter, the real answer in industrial North America is again just all time records in almost every metric that you can see. There’s no one answer there. There’s not one incident. It is across the board. It is with all of our markets. It’s with all of our product groupings. And it has just been remarkable to see the progress that we’ve seen there. And we’re really looking forward to a great FY ‘13 with those same mix of businesses given the cost structure that we’ve been working so hard to get to by this time. So we feel very, very good about how that’s working. And the good news there is there is not one answer.

Okay. Thank you.

Thanks, Alex.

Your next question comes from the line of Jamie Cook with Credit Suisse. You may proceed.

Good morning. I guess.

Good morning, Jamie.

Hi. Two questions. One, on the guidance specifically with regards to North America, I guess I’m surprised by the topline forecast of 5% to 9% given the order trends. And I think most of the acquisitions that you’ve done were more focused on the international. So, I’d say I don’t believe you have help there. So what gives you confidence or what are the assumptions behind the 5% to 9%? And what do you assume for price versus volume? And then I guess my follow-up question, Don, you did answer the question on the share repurchase. But I guess, I’m surprised. It was so low just given the commentary last quarter about increasing, going to the Board and increasing the authorization. So, why not something more meaningful or there is a signal that perhaps capital allocation is going in another direction. How are you thinking about larger deals in that respect? Thanks and I’ll get back in queue.

Yeah. I don’t want you to leave thinking that, Jamie. We did as much as we could do in the quarter. I would have done a lot more if I could. I was in a blacked out for a big part of the quarter. And we are limited. Keep in mind, that I don’t control, how much I can buyback and from the standpoint that we’re limited based on the trading volume. We can’t exceed a certain share buyback based on the current average trading volume. So I’m very limited there. I did as much as I could based on our criteria and the blackout period and the trading volume dynamic. I had the ability to buyback obviously, more if those conditions were more favorable for us but that we did what we could. Then don’t read anymore into it than that. I would have liked to have done three times that much if I could have. What gives us confidence in the North America. Right now, if you look at the order trends, the 3, 12 is running around 105%, which is positive North America positive. This is -- and on the industrial side, not counting the aerospace which is still positive. And the 12,12, which is the last 12 months orders or the previous 12, is running about 109%. So those -- when we look at the forecast we’re looking really at these order trends and projecting those out into the future. So we still see a very strong picture in North America, both on industrial side and on the aerospace part of that equation. Of course, there are certain market segments that are weaker than others. But by and large that gives us some confidence that we’re going to continue forward. Some of the strong segments, distribution,…

And then Jon, just to ask the question slightly differently in North America and I know you went away from doing this but it’s just helpful given the macro uncertainty. Was there any unusual activity when you look at how the -- you give us orders for the quarter but how the months sort of played out and what you’re looking at in July? Because, I’m wondering if things just continue -- if things are stable throughout the three months or got worse, or -- and sort of what you’re seeing in July that gives you I guess confidence behind the outlook?

Jamie, I think what we’ve seen here in July is a -- gives us confidence in our forecast. We’re still seeing throughout the Q4 and including July with our order rates preliminary data with July of course here sitting here on the second day of the month. We’re seeing continued stabilization and continued patterns that we’ve seen throughout the last six months. Certainly March through June were stable and we’re seeing that same level of activity here in the month of July.

Okay. Thanks.

Jamie, I don’t know if you’re the one that asked about the pricing and all that.

Yeah. I did.

Okay. Let me just maybe I can address that real quick. And I think everybody understands on the call that we look at two metrics here and we measure this for the entire company. One is the purchase price index and our goal is to be less than one, so we’re buying at a lower price than we were in a previous period. And the sell price index, which would indicate we want that greater than one. So that it would indicate we’re selling at a higher price than we did in the prior period. And I can just tell you that the difference between those two right now, which we do track very closely for the company is slightly positive. Not tremendously positive but slightly positive, which basically says that we are recapturing our cost plus the margin okay, on any cost input increases that we’ve incurred. Looking at specifics, most of the input costs are slightly one way or another. Like for instance, steel would be slightly down. Aluminum is trending slightly down on a raw material input basis. Some of the higher tech polymers that we deal with actually the prices are maintaining at a pretty strong level, pretty high level I should say. And we think they’ll probably remain high, so some supply problems in a couple areas in particular. All other ones on the polymer side are relatively flat. It’s not going up or down. We saw just recently, a little trend up on copper and brass. It had been dropping but it has made a reversal in that we saw a little bit of an increase there. The oil price is $85, that’s kind of flat. And nickel, which would be basically an input cost in some of our higher tech products is flat right now. So overall, we don’t -- we think we’re going to stay ahead of it. Any cost changes, input changes like we have in the last 10 years, since we’ve launched these strategic initiatives. We’re pretty much right on top of this. And we’ll make sure we recoup the input costs plus the margins so that we don’t detract from our overall margin for the business.

Okay. Thanks. I’ll get back in queue.

Thanks, Jamie.

Our next question comes from the line of Rob McCarthy with Robert W. Baird. You may proceed.

Hello. This is Mig Dobre in for Rob McCarthy. Good morning.

Good morning.

I guess, my first question, I’m sort of going back to the industrial international guidance and trying to put some pieces together here. Because orders obviously have continued to weaken from the prior quarter down 9%, yet your guidance is calling at the mid point for flat year-over-year revenues. FX headwinds are still there. And I do realize that acquisitions are a part of the equation here. But can you maybe provide a little bit of color about, how you’re thinking in FX versus the acquisition contribution for the segment? And also what your thoughts are for overall organic growth first half versus second half, baked into the mid point of this guidance.

Okay. This is Pam speaking. Let me address that a little bit for you. Don talked about the acquisitions that we’ve made. And when you really look at the component breakdown of those acquisitions and where they lie within the segments, the majority or the largest part really does lie within the international segment. So there is a nice component for the year coming from acquisitions. Of course, you do have some currency headwind. However, just to remind everybody how we look at currency is we take the right at the end of June. We do not try to forecast what currency is going to do throughout the next year. So, just as a natural fall out, the currency becomes less at the end of fiscal year 2013 than it was fiscal year 2012, when you compare the June year end rate to the prior year. So, that plays into it a little bit. So you are right. International orders are down 9%. So when you look at the first half of the year, you do see that international kind of follows that pattern to some degree and then it does pick up in the second half. But you do have to remember that acquisitions do play a part in that first half, second half as well.

Okay. I see. And then just as a follow-up here. Can you comment a little bit on the cost side here? If I’m right about the guidance, it seems to imply a slight increase to operating income on flat revenue. And with all the acquisitions coming in and everything else, I’m wondering how you’re thinking about the cost base?

And you’re talking about just international?

Yeah.

Yeah. If I recall correctly, we have flat sales fiscal year ‘12 to 2013. But there is some deterioration. There was some deterioration in earnings, okay. Now just looking at fiscal year 2013 and playing out on an organic basis, like I say it’s fairly negative in the first half. I would say in line with the orders that you’re seeing. And then we show improvement in the second half, which is what I talked about earlier. So, I think when you’re looking at the incrementals on the international, you have to make sure that you take that currency into consideration.

Okay. But I guess the guidance itself does not bake in some sort of action on a cost side in international at this point.

There are always cost improvements baked into the guidance. We always forecast a little bit for productivity improvements every year.

Okay. Thank you for taking my questions.

Our next question comes from the line of Josh Pokrzywinski with MKM Partners. You may proceed.

Hi. Good morning, guys.

Hi, Josh.

Just to follow-up on the last question about the, I guess, the cadence and industrial in the rest of the world. Maybe this is putting too fine a point on it but how should we think of Europe versus Asia versus Latin America in that second half acceleration. Is it a lot of it being better, better China growth, or easier comps in Europe? Maybe even just qualitatively help us understand the big moving pieces.

Okay.

Josh, Jon here. I think that, first of all looking at the international industrial business. As we pointed out, we were down in orders here in Q4 double-digits for Europe. Don commented on that earlier. As we go throughout the year, as we see at a low level stabilizing revenues at this point. We will see ever increasing rate starting here in our Q3, which would be in January. That’s how we show that this guidance is set here for the second half. Now, the biggest point to make about our international business is, our business in Asia, specifically in China. We are seeing positive indications of order trends in China. Asia never really went down. China did go down specifically in Q4 slightly. We see and we are getting word of improvements as the year goes on. Given the macro situation here right now, we fully understand the risks that are built into the second half of our model here for FY ‘13. But what out weighs all of those risks, is the incredible demand that is really truly there, the underlying demand that is truly there that is going to ultimately be pulled through all of our businesses in Asia. And really be able to also help ignite demand further for us in Europe in the second half also. So that’s without going country by country with you. I mean, that’s the big picture as to how we’re looking at it. We’re seeing flat at a low level in the first half and gradual growth in the second half. And that’s how our guidance internationally is put together. We understand, as Don mentioned, the issue with the soft landing in Asia. We understand very well the debt crisis in Europe. But we sit here and we look at our data and we look at our trends and we do a bottoms up review with all of our people around the world. And we matched all of that data that we get from a bottoms up review with the industrial production metrics that we see globally around the world. And then we try to get the best guidance that we can. And that’s how it shakes out for us this year. I think we did a pretty good job this time last year coming up for FY ‘12. And we feel confident about these numbers here for FY ‘13, as well as we did this time last year. So I’m hoping that helps, Josh.

Understood. No. That’s very helpful. And just a follow-up on some of the other moving pieces. Just want to make sure I’m understanding this right. About a $0.15 roughly back of the envelope impact from FX and then you said restructuring was going to be $0.05 to $0.10. One other thing you didn’t touch on, which I think you held back fiscal ‘12 was an out sized investment particularly in Asia. Am I remembering that right and how should we think of that trending fiscal ‘13 versus fiscal ‘12?

Well, I think first of all the estimates that you just made are about right here in terms of restructuring and FX. So, I’m there with you. What’s happening in Asia with us and I think I might be able to answer your question but if I don’t please ask again. What’s happening in Asia is this. We’ve got the topline that is stabilizing here for us and ever growing into the second half. And of course, everybody understands the -- in all of Asia, not just China but all of Asia the underlying demand that is there. But also what’s happening in Asia and we’ve talked about this before in prior conferences with us is that we have put in a cost structure that is giving us incremental fixed costs there as we build out and we have prepared for the future. So, our overall margins looking backwards in FY ‘12 as compared to maybe FY ‘10 or ‘11 are down slightly, part of that due to the reduction in the pace of the increase in sales is really kind of driven by those incremental fixed costs base as we build out and prepare for the long-term and prepare for the incredible growth that we’ve seen and we will be seeing as time goes on. So that’s the one item, big picture that has impacted us in Asia and impacting our margins. Now as we obviously start to grow at ever increasing rates in Asia as FY ‘13 proceeds. We will be driving incremental MROS, marginal return on sales that it will get us back to the levels that we were seeing in FY ‘10, FY ‘11 range.

Okay. So just so I’m clear, that is you’re reaching the point now where you’re getting leverage off of that fixed cost investment. It’s not -- there’s not an incremental drag into ‘13?

Yeah. I wish I stated that clearly.

All right. I appreciate it. Thanks, guys.

Thanks, Josh.

Our next question comes from the line of Ann Duignan with JPMorgan. You may proceed.

Hi, guys. Good morning.

Good morning, Ann.

Can we take a step back to two comments that you made. You said that Latin America, I think you said was up 7%. Just curious where you’re seeing the strength there, is if there any specific market or any specific country? And then same a little bit more detail on this early signs of beginnings of a re-acceleration in China, what specifically are you seeing or hearing? Just curious.

Well, Ann. This is Don. I would just kind of maybe read off a few of the areas in Latin America that would be posing -- posting positive trends. Machine tools would be one. General industrial, semi con interesting enough, semi con up and telecom, off highway construction, heavy trucks, lawn and turf and industrial trucks material handling type equipment. Those would be the ones that we would show as positives in Latin America regions specifically. And there’s a likely number that would be not positive but those would be the positive ones and then the other part of your question?

And mostly in Brazil.

Yeah. And what was the other part of it?

That’s it.

That was it?

Yeah.

No. The other part was China, early signs what specific signs or what gives you some hope that China is re-accelerating?

Well, just -- I think just what we’ve heard, first of all, the order trend is still positive here for us. That would be the one thing. And then just kind of the feedback that we’re getting from our team in China that the government is kind of relaxing the -- or stimulating. I should say, not the reaction but trying to stimulate a little bit more activity there. I don’t think it’s going to back up to 10% or 12%. But I think it will go north of 7%. So, just the feedback that we’re getting that the government is planning to get the economy moving at a little higher pace.

Okay. And then just as a follow-up on the share repurchase program, just kind of curious. I mean, wouldn’t you have known what the restrictions were and how many shares you could buy back per day and the blackout periods? Wouldn’t you have known that at the beginning of the quarter or before last quarter’s conference call?

Sure. Yeah. We knew all that, absolutely. That the -- so we bought back, we didn’t know what the daily activity rate was going to be but we knew that we were limited to 25%. And we knew where the current price of the stock was, at least at the call relative to our -- what you might call our range, our target range and where that was relative to our DCF models. We knew all that. And we bought back, like I said, as much as I could given the blackout and the limitations we had from those other factors. So, no absolutely we knew all of that that I’ve just described.

So was theoretically impossible that you were ever going achieve the $14 million?

Well, yeah. Go ahead, Jon.

I think Ann the one point here that perhaps you’re getting to is that no. Theoretically we could have bought back all of that. But if you recall the day of that call, our stock price moved dramatically. We had a price in mind that we thought was our trigger point and we did not reach that trigger point until later in the quarter. And this is all based on the analysis that we do as Don talked about in the DCF. And that’s how we do our analysis. It was a much different picture the morning of the call last quarter versus the ensuing few weeks.

Okay. And that might have been because Don told us how much he was going to spend and how many shares he could buy back?

Well.

And that’s not going away. I mean, I have the support of the Board. We indicated that we bought back in the last two years $1 billion, maybe $1.2 billion. We do have the intent to buy back more. And I know I have the support of the Board to continue on. So I won’t read any more into it than that. I think that you were hearing me on the call saying that share buyback is going to be a major emphasis this year. And we’re going to continue on doing what we’ve been doing in the last couple of years here for sure.

Okay. In the interest of time, thank you. I’ll take my other questions off line. Thanks.

Thanks Ann.

Our next question comes from the line of Stephen Volkmann with Jefferies & Company. You may proceed.

Good morning guys.

Good morning.

I think most of it has been answered. But Don I just thought I might take you up on your initial comments where you said that there was probably some more opportunity with margins over some period of time. And that you would expand upon that during the Q&A if necessary. So I’d love to hear that?

I’m not sure when we really talked about that. But yeah and it’s funny because we talk about it here and I’m just preparing for the call. We often times get the question that we’re kind of peaked out and all that. And I get that question every year for the last 10 years. I guess I’ve been around here long enough. I guess you start hearing things over and over again. So every year we’re kind of peaked out. And the next year, we’re going to be down. But we peak, so we set a new record and we peaked out. So couple of things that I just want to point out to people all those that are on the call, is first of all -- and I mentioned this earlier specifically with respect to North America margins that North American margins aren’t at 15% that are at 17% plus. The implication there is that we should be able to do the same everywhere around the world, okay, as far as margins as we’re doing in North America. So we haven’t stopped. As far as the margin growth that we’ve seen over time, I don’t anticipate stopping. There will be some theoretical limit at some point in time. I don’t know what that number will be. Here’s just a couple of my thoughts. On these acquisitions, for those that have been tracking us long enough, the one thing that we’ve done is we’ve done 100 and some acquisitions since I’ve been around. And in that period of time we increased our margins to over 15%. The way we did that is by executing on the win strategy. And we executed on the strategic initiatives there, the procurement, the pricing, the lien and we delivered about 600 basis points improvement…

Okay. I think at this time due to time, we’re going to have to move to closing comments. Don, you have just a few closing comments?

Yeah. Thanks, Pam. So I want to just go ahead and thank everyone that took the time to join us on the call today. I think we had some good dialogue here. As always, I want to take this opportunity to also thank our employees for their continued commitment and for delivering the outstanding performance that we did this year. We had a record year of performance on top of a record year last year. It’s just a string of records for the company. And it doesn’t happen without a strong team and the team is really doing a great job executing on the win strategy and achieving those record results. And so we’re certainly very, very proud of their accomplishments. They’ve also lead the transformation of Parker into what I describe or talk about as being the premier diversified industrial company that we are today and among the best performing companies in our peer group. And I think anyone on the call could certainly look at virtually any metric and put us up against the top companies in our peer group. And we’re going to look very favorable by that comparison. So very excited about the year. We’re going to have another hopefully record year this coming year. I want to thank everybody for participating on the call and certainly for your continued interest in the company. Pam will be around as always after the call to take any questions. And so with that I’d just say goodbye and have a great day. Thank you very much.

Ladies and gentlemen that concludes today’s conference. Thank you so much for your participation. You may now disconnect. Have a great day.