Click here to view this release in printable (PDF) format
CLEVELAND, Jan. 16 /PRNewswire-FirstCall/ -- Parker Hannifin Corporation today reported a 29-percent increase in fiscal second-quarter net income of $37.6 million, or 32 cents per diluted share, on sales of $1.52 billion for the period ended December 31, 2002. Before five cents per share in previously announced realignment costs (severance and manufacturing relocations) and write-down of an investment in a Japanese joint venture, quarterly earnings were 37 cents per diluted share. Also, a change in the company's tax rate decreased earnings by an additional penny per share. Last year, second-quarter net income was $29.1 million, or 25 cents per diluted share (33 cents before realignment costs and an investment write-down), on sales of $1.44 billion.
"We're in the final stages of our planned realignment activities," said Parker CEO Don Washkewicz. "Our cash flow was strong again this quarter, and working capital and capital expenditures are down materially from two years ago. We remain focused on our 'Win Strategy' initiatives to further enhance our prospects for future growth and profitability."
Working off of backlog, Parker Aerospace recorded an operating margin of 15.5 percent for the quarter, with a 4.5-percent decline in sales. The company noted stability in commercial aviation, but expects its aerospace unit to contend with margin pressure for the foreseeable future.
Both the North American and International Industrial units increased sales and operating income during the second quarter. With help from recent acquisitions and currency, sales were up 29 percent in the company's International Industrial businesses, and the operating margin was 6.0 percent. The North American Industrial margin was 4.1 percent, on a four-percent increase in sales.
In the "Other" segment, sales decreased seven percent after last year's divestiture of a non-core business, while the operating margin improved to 6.3 percent. Included in this segment is Climate and Industrial Controls, which posted higher sales and profits.
For the first six months of fiscal 2003, the company recorded net income of $98.5 million, or 84 cents per diluted share (90 cents before realignment charges and an investment write-down) on sales of $3.10 billion. Income is up 10 percent over last year's $89.6 million, or 77 cents per diluted share (88 cents excluding realignment costs and an investment write-down), earned on sales of $2.91 billion.
"Historically, our post-recession rebound has been very strong. When the industrial recession ends, we're confident the company will be positioned to resume more robust growth and margin improvement," said Washkewicz.
Excluding realignment costs, the company's earnings in the third quarter of fiscal year 2003 are expected to be between 55 and 65 cents per share, while earnings for the full year are expected to range from $2.10 to $2.30 per share.
In addition to providing earnings estimates, Parker advises shareholders to note order trends, for which the company makes a disclosure several business days after the conclusion of each month. This information is available on the company's investor information web site, at www.phstock.com .
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call and slide presentation to discuss its fiscal second-quarter results is available to all interested parties via live webcast today at 10:00 a.m. ET, on the company's investor information web site, www.phstock.com. 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.
With annual sales exceeding $6 billion, 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 commercial, mobile, industrial and aerospace markets. The company employs more than 48,000 people in 44 countries around the world. For more information, visit the company's web site at www.parker.com , or its investor information site at www.phstock.com .
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 company's future performance and earnings projections may differ materially from current expectations, depending on economic conditions within both its industrial and aerospace markets, and the company's ability to achieve anticipated benefits associated with announced realignment activities and strategic initiatives to improve operating margins. Among the other factors which may affect future performance are: changes in business relationships with and purchases by or from major customers or suppliers, including delays or cancellations in shipments; uncertainties surrounding timing, successful completion and integration of acquisitions; threats associated with and efforts to combat terrorism; competitive market conditions and resulting effects on sales and pricing; increases in raw-material costs that cannot be recovered in product pricing; and global economic factors, including currency exchange rates, difficulties entering new markets and general economic conditions such as interest rates. In each quarterly earnings report, the company intends to provide a range stating expected earnings per share for the succeeding quarter and full fiscal year, reflecting these ranges as estimates of diluted earnings per share before realignment activities. The company makes these statements as of the date of this disclosure, and while it undertakes no obligation to update them, reserves the right to update its earnings projections for any reason during the quarter, including the occurrence of material events.
PARKER HANNIFIN CORPORATION - DECEMBER 31, 2002 CONSOLIDATED STATEMENT OF INCOME (Unaudited) (Dollars in thousands Three Months Ended Six Months Ended except per share December 31, December 31, amounts) 2002 2001 2002 2001 Net sales $1,517,201 $1,437,330 $3,103,105 $2,913,197 Cost of sales 1,258,827 1,203,893 2,558,717 2,401,518 Gross profit 258,374 233,437 544,388 511,679 Selling, general and administrative expenses 177,142 164,883 353,397 330,298 Other income (deductions): Interest expense (19,356) (21,555) (39,050) (42,009) Interest and other income, net (3,830) (11) (2,204) 106 (23,186) (21,566) (41,254) (41,903) Income before income taxes 58,046 46,988 149,737 139,478 Income taxes 20,494 17,926 51,210 49,835 Net income $37,552 $29,062 $98,527 $89,643 Earnings per share: Basic earnings per share $.33 $.25 $.85 $.78 Diluted earnings per share $.32 $.25 $.84 $.77 Average shares outstanding during period - Basic 116,279,317 115,010,099 116,255,974 115,088,506 Average shares outstanding during period - Diluted 117,118,546 115,618,970 116,863,141 115,685,834 Cash dividends per common share $.18 $.18 $.36 $.36
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three Months Ended Six Months Ended (Unaudited) December 31, December 31, (Dollars in thousands) 2002 2001 2002 2001 Net sales Industrial: North America $669,905 $646,299 $1,397,482 $1,297,139 International 373,921 290,446 739,580 586,737 Aerospace 275,400 288,312 552,721 600,812 Other 197,975 212,273 413,322 428,509 Total $1,517,201 $1,437,330 $3,103,105 $2,913,197
Segment operating income
Industrial: North America $27,423 $23,576 $78,468 $64,041 International 22,321 13,207 48,967 33,035 Aerospace 42,651 46,446 85,184 103,338 Other 12,445 9,429 31,289 26,421 Total segment operating income 104,840 92,658 243,908 226,835 Corporate general and administrative expenses 19,395 15,674 39,493 32,613 Income from operations before interest expense and other 85,445 76,984 204,415 194,222 Interest expense 19,356 21,555 39,050 42,009 Other expense (income) 8,043 8,441 15,628 12,735 Income before income taxes $58,046 $46,988 $149,737 $139,478
|Note:||Certain prior period amounts have been reclassified to conform to|
|the current year presentation.|
CONSOLIDATED BALANCE SHEET (Unaudited) (Dollars in thousands) December 31, 2002 2001 Assets Current assets: Cash and cash equivalents $35,365 $28,883 Restricted investments 92,912 Accounts receivable, net 898,888 813,638 Inventories 1,058,579 1,110,732 Prepaid expenses 41,298 43,055 Deferred income taxes 87,483 101,303 Total current assets 2,121,613 2,190,523 Plant and equipment, net 1,674,837 1,701,925 Goodwill 1,079,808 1,074,500 Intangible assets, net 54,495 25,678 Other assets 660,467 556,192 Total assets $5,591,220 $5,548,818 Liabilities and shareholders' equity Current liabilities: Notes payable $580,816 $493,278 Accounts payable 371,835 336,454 Accrued liabilities 409,126 449,027 Accrued domestic and foreign taxes 54,899 60,605 Total current liabilities 1,416,676 1,339,364 Long-term debt 773,733 1,063,061 Pensions and other postretirement benefits 510,206 216,093 Deferred income taxes 90,629 145,700 Other liabilities 128,850 199,556 Shareholders' equity 2,671,126 2,585,044 Total liabilities and shareholders' equity $5,591,220 $5,548,818 CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) Six Months Ended December 31, (Dollars in thousands) 2002 2001 Cash flows from operating activities: Net income $98,527 $89,643 Depreciation and amortization 129,827 122,516 Net change in receivables, inventories, and trade payables 52,551 135,699 Net change in other assets and liabilities (31,920) (2,582) Other, net 11,464 5,060 Net cash provided by operating activities 260,449 350,336 Cash flows from investing activities: Acquisitions (less cash acquired of $8 in 2002 and $343 in 2001) (1,999) (310,178) Capital expenditures (79,053) (113,119) Other, net 10,402 (14,176) Net cash used in investing activities (70,650) (437,473) Cash flows from financing activities: Net proceeds from (payments for) common share activity 2,222 (4,710) Net (payments of) proceeds from debt (162,644) 141,216 Dividends (41,696) (41,430) Net cash (used in) provided by financing activities (202,118) 95,076 Effect of exchange rate changes on cash 1,300 (2,621) Net (decrease) increase in cash and cash equivalents (11,019) 5,318 Cash and cash equivalents at beginning of period 46,384 23,565 Cash and cash equivalents at end of period $35,365 $28,883
SOURCE Parker Hannifin Corporation
CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, or email@example.com, Financial Analysts, Timothy K. Pistell, Treasurer, +1-216-896-2130, or firstname.lastname@example.org, both of Parker Hannifin Corporation