Parker Reports Fiscal 2011 First Quarter Sales, Net Income, and Record Quarterly Earnings per Share

CLEVELAND, Oct. 19 /PRNewswire-FirstCall/ --

    --  Net Income More Than Triples
    --  Company Increases Guidance for Fiscal 2011
    --  Cash Flow Remains Strong
    --  Order Rates Continue To Show Significant Increases

Parker Hannifin Corporation (NYSE: PH), the global leader in motion and control technologies, today reported results for the fiscal 2011 first quarter ending September 30, 2010.  

(Logo: )

(Logo: )

Fiscal 2011 first quarter sales were $2.8 billion, an increase of 26.5 percent from $2.2 billion in the same quarter a year ago.  Net income was $249.0 million compared with $74.0 million in the first quarter of fiscal 2010.  Earnings per diluted share for the quarter were $1.51, which is a quarterly record and compares with $0.45 in last year's first quarter.   Cash flow from operations for the first quarter of fiscal 2011 was $122.9 million, or 4.3 percent of sales, compared with cash flow from operations of $260.1 million, or 11.6 percent of sales in the prior year period.   Fiscal 2011 first quarter cash flow from operations included a $200 million discretionary contribution to the company's pension plan. Excluding this discretionary contribution, cash flow from operations as a percent of sales was 11.4 percent for the first quarter of fiscal 2011.

"Demand levels continued to improve across many markets as reflected in a significant increase in sales for the first quarter," said Chairman, CEO and President Don Washkewicz.   "Sales improved in every segment, with total sales increasing 27 percent organically, while foreign currency translation negatively impacted sales by 1 percent.  Order rates also increased in all segments.

"We are particularly pleased with our ability to leverage improved top line performance into record level operating margins and earnings.  Our total segment operating margin performance was at an all-time record level of 15.5 percent, led by record Industrial North America segment margins of 17.8 percent and record Industrial International segment margins of 16.8 percent.  We also continued to deliver strong operating cash flow, which gave us the flexibility to make a discretionary contribution to our pension plan."

Segment Results

In the Industrial North America segment, first-quarter sales increased 36.0 percent to $1.1 billion, and operating income was $189.4 million compared with $76.2 million in the same period a year ago.  

In the Industrial International segment, first-quarter sales increased 28.5 percent to $1.1 billion, and operating income was $183.8 million compared with $61.8 million in the same period a year ago.  

In the Aerospace segment, first-quarter sales increased 4.8 percent to $436.7 million, and operating income was $43.8 million compared with $53.1 million in the same period a year ago.

In the Climate and Industrial Controls segment, first-quarter sales increased 25.5 percent to $234.7 million, and operating income was $21.6 million compared with $10.5 million in the same period a year ago.    


Parker reported an increase of 29 percent in total orders for the quarter ending September 30, 2010, compared with the same quarter a year ago.  The company reported the following orders by operating segment:  

    --  Orders increased 31 percent in the Industrial North America segment,
        compared with the same quarter a year ago.
    --  Orders increased 34 percent in the Industrial International segment,
        compared with the same quarter a year ago.
    --  Orders increased 16 percent in the Aerospace segment on a rolling
        12-month average basis.
    --  Orders increased 23 percent in the Climate and Industrial Controls
        segment, compared with the same quarter a year ago.


For fiscal 2011, the company has increased guidance for earnings from continuing operations to the range of $5.20 to $5.80 per diluted share.

Washkewicz added, "First quarter performance has clearly demonstrated the company's ability to generate strong operating cash flow and strong incremental returns on increased revenues.  This gives us confidence in our ability to deliver earnings per share in a higher range for fiscal year 2011. The focus of our employees will continue to be on executing the Win Strategy and our cash flow position affords us the flexibility to drive growth through investments in innovation, international expansion, acquisitions, as well as expansion of our global distribution and industrial retail channels.  Thanks to the efforts of Parker's employees in all regions who are pursuing a consistent strategy, we are building momentum from a position of great strength."  

NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal 2011 first quarter results are available to all interested parties via live webcast today at 10:00 a.m. ET, on the company's investor information web site at To access the call, click on the "Live Webcast" link. From this link, users also may complete a pre-call system test and register for e-mail notification of future events and information available from Parker.  A replay of the conference call will also be available at for one year after the call.

With annual sales of $10 billion in fiscal year 2010, Parker Hannifin is the world's leading diversified manufacturer of motion and control technologies and systems, providing precision-engineered solutions for a wide variety of mobile, industrial and aerospace markets. The company employs approximately 55,000 people in 46 countries around the world. Parker has increased its annual dividends paid to shareholders for 54 consecutive fiscal years, among the top five longest-running dividend-increase records in the S&P 500 index. For more information, visit the company's web site at, or its investor information web site at

Notes on Orders

Orders provide near-term perspective on the company's outlook, particularly when viewed in the context of prior and future quarterly order rates. However, orders are not in themselves an indication of future performance. All comparisons are at constant currency exchange rates, with the prior year restated to the current-year rates. All exclude acquisitions until they can be reflected in both the numerator and denominator. Aerospace comparisons are rolling 12-month average computations. The total Parker orders number is derived from a weighted average of the year-over-year quarterly percent change in orders for the Industrial North America, Industrial International, and Climate and Industrial Controls segments, and the year-over-year 12-month rolling average of orders for the Aerospace segment.

Forward-Looking Statements

Forward-looking statements contained in this and other written and oral reports are made based on known events and circumstances at the time of release, and as such, are subject in the future to unforeseen uncertainties and risks. All statements regarding future performance, earnings projections, events or developments are forward-looking statements. It is possible that the future performance and earnings projections of the company and individual segments may differ materially from current expectations, depending on economic conditions within its mobile, industrial and aerospace markets, and the company's ability to maintain and achieve anticipated benefits associated with announced realignment activities, strategic initiatives to improve operating margins, actions taken to combat the effects of the current economic environment, and growth, innovation and global diversification initiatives. A change in economic conditions in individual markets may have a particularly volatile effect on segment results. Among other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers, suppliers or distributors, including delays or cancellations in shipments, disputes regarding contract terms or significant changes in financial condition, and changes in contract cost and revenue estimates for new development programs; uncertainties surrounding timing, successful completion or integration of acquisitions; ability to realize anticipated costs savings from business realignment activities; threats associated with and efforts to combat terrorism; uncertainties surrounding the ultimate resolution of outstanding legal proceedings, including the outcome of any appeals; competitive market conditions and resulting effects on sales and pricing; increases in raw material costs that cannot be recovered in product pricing; the company's ability to manage costs related to insurance and employee retirement and health care benefits; and global economic factors, including manufacturing activity, air travel trends, currency exchange rates, difficulties entering new markets and general economic conditions such as inflation, deflation, interest rates and credit availability. The company makes these statements as of the date of this disclosure, and undertakes no obligation to update them unless otherwise required by law.




                                              Three Months Ended September 30,

(Dollars in thousands except per share
amounts)                                      2010         2009

Net sales                                     $ 2,829,273  $ 2,237,165

Cost of sales                                 2,137,874    1,800,945

Gross profit                                  691,399      436,220

Selling, general and administrative expenses  333,584      301,843

Interest expense                              24,633       25,723

Other (income), net                           (3,182)      (5,375)

Income before income taxes                    336,364      114,029

Income taxes                                  87,334       40,059

Net income                                    249,030      73,970

Less: Noncontrolling interests                1,859        477

Net income attributable to common
shareholders                                  $ 247,171    $ 73,493

Earnings per share attributable to common

Basic earnings per share                      $ 1.53       $ .46

Diluted earnings per share                    $ 1.51       $ .45

Average shares outstanding during period -
Basic                                         161,272,536  160,629,291

Average shares outstanding during period -
Diluted                                       164,107,220  162,040,785

Cash dividends per common share               $ .27        $ .25


(Unaudited)                                   Three Months Ended September 30,

(Dollars in thousands)                        2010         2009

Net sales


North America                                 $ 1,064,915  $ 783,085

International                                 1,092,981    850,250

Aerospace                                     436,680      416,856

Climate & Industrial Controls                 234,697      186,974

Total                                         $ 2,829,273  $ 2,237,165

Segment operating income


North America                                 $ 189,362    $ 76,171

International                                 183,800      61,823

Aerospace                                     43,776       53,146

Climate & Industrial Controls                 21,552       10,497

Total segment operating income                438,490      201,637

Corporate general and administrative expenses 33,354       26,302

Income from operations before interest

expense and other                             405,136      175,335

Interest expense                              24,633       25,723

Other expense                                 44,139       35,583

Income before income taxes                    $ 336,364    $ 114,029



(Unaudited)                          September 30,  June 30,     September 30,

(Dollars in thousands)               2010           2010         2009


Current assets:

Cash and cash equivalents            $ 923,836      $ 575,526    $ 189,849

Accounts receivable, net             1,694,313      1,599,941    1,452,494

Inventories                          1,295,137      1,171,655    1,266,319

Prepaid expenses                     104,216        111,545      100,189

Deferred income taxes                130,094        130,129      124,640

Total current assets                 4,147,596      3,588,796    3,133,491

Plant and equipment, net             1,770,983      1,697,881    1,891,438

Goodwill                             2,915,602      2,786,334    2,964,321

Intangible assets, net               1,180,021      1,150,051    1,276,049

Other assets                         695,519        687,320      671,874

Total assets                         $ 10,709,721   $ 9,910,382  $ 9,937,173

Liabilities and equity

Current liabilities:

Notes payable                        $ 391,303      $ 363,272    $ 304,083

Accounts payable                     953,259        888,743      659,764

Accrued liabilities                  742,087        776,527      719,228

Accrued domestic and foreign
taxes                                195,455        176,349      152,262

Total current liabilities            2,282,104      2,204,891    1,835,337

Long-term debt                       1,745,812      1,413,634    1,855,531

Pensions and other postretirement
benefits                             1,327,195      1,500,928    1,255,515

Deferred income taxes                149,701        135,321      187,907

Other liabilities                    212,332        196,208      233,270

Shareholders' equity                 4,894,945      4,367,965    4,481,984

Noncontrolling interests             97,632         91,435       87,629

Total liabilities and equity         $ 10,709,721   $ 9,910,382  $ 9,937,173


                                                   Three Months Ended September
(Unaudited)                                        30,

(Dollars in thousands)                             2010       2009

Cash flows from operating activities:

Net income                                         $ 249,030  $ 73,970

Depreciation and amortization                      84,986     92,963

Share incentive plan compensation                  29,242     26,436

Net change in receivables, inventories, and trade
payables                                           (54,956)   15,291

Net change in other assets and
liabilities                                        (224,180)  73,694

Other, net                                         38,758     (22,301)

Net cash provided by operating
activities                                         122,880    260,053

Cash flows from investing activities:

Acquisitions (net of cash of $1 in 2010)           (8,129)    -

Capital expenditures                               (52,690)   (30,099)

Proceeds from sale of plant and
equipment                                          2,169      4,422

Other, net                                         (318)      (1,334)

Net cash (used in) investing activities            (58,968)   (27,011)

Cash flows from financing activities:

Net (payments for) common share activity           (3,305)    (1,246)

Net proceeds from (payments for) debt              293,952    (197,279)

Dividends                                          (43,648)   (40,171)

Net cash provided by (used in) financing
activities                                         246,999    (238,696)

Effect of exchange rate changes on cash            37,399     7,892

Net increase in cash and cash
equivalents                                        348,310    2,238

Cash and cash equivalents at beginning
of period                                          575,526    187,611

Cash and cash equivalents at end of
period                                             $ 923,836  $ 189,849

SOURCE Parker Hannifin Corporation