(Photo: http://www.newscom.com/cgi-bin/prnh/19990816/PHLOGO )
"We're staying focused on our lean initiatives," said Parker CEO Don Washkewicz. "In our acquired and base businesses, we made progressive moves during this downturn to improve operating efficiencies, especially consolidating and relocating product lines."
The company noted that revenue in its base business, excluding acquisitions completed within the last year, was 14 percent lower than last year, reflecting lower volume in every segment, including Aerospace. With a two-percent decline in sales, Parker Aerospace recorded a margin of 16.1 percent during the quarter (16.8 percent excluding realignment costs).
Quarterly sales and income fell across the board on the industrial side, with a 12-percent decline in North American sales and a seven-percent drop in the International units. In both cases, operating income was substantially lower, with the most significant declines noted in what traditionally are the company's most profitable industrial markets, including factory automation, semiconductor manufacturing and telecommunications. Costs associated with realignment and the investment write-down also affected industrial margins, especially in the International business, which recorded a 2.8-percent return on sales, or 5.0 percent without these costs. The North American industrial units reported an operating margin of 3.6 percent (4.0 percent excluding realignment costs).
In the company's "Other" segment, including Climate & Industrial Controls and the addition of Astron and Wynn Oil since last year, the return on sales was 4.4 percent, or 5.2 percent without realignment costs.
Year-to-Date Results
For the first six months of fiscal 2002, the company recorded net income of $89.6 million, or 77 cents per diluted share (88 cents excluding realignment costs) on sales of $2.91 billion. A year ago, net income was $203.4 million, or $1.77 per diluted share ($1.74 excluding a net gain on the sale of real estate and goodwill amortization), with sales of $2.95 billion.
Outlook
"We have yet to see a sustained trend of improvement in industrial demand, but we do expect to see a gradual, sequential upturn in the third and fourth fiscal quarters," said Washkewicz. "And in aerospace, we're expecting military demand to begin to offset pressure on the commercial side."
The company's estimate of earnings in the third quarter of fiscal year 2002 is expected to be between 48 and 60 cents per share, while earnings for the full year are expected to range from $2.00 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 .
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 45,000 people in 45 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:
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 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 in industrial and aerospace markets, including any adverse effects related to the events of September 11, 2001, and the company's ability to achieve anticipated benefits associated with realignment and acquisition-integration activities. Among 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; competitive market conditions and resulting effects on sales and pricing; increases in raw-material costs that cannot be recovered in product pricing; threats associated with terrorism; and global economic factors, including currency exchange rates and general economic conditions such as interest rates. In each quarterly earnings report, the company states a range of expected earnings per share for the succeeding quarter and full fiscal year, as estimates of diluted earnings per share before unusual items. 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.
NOTICE OF CONFERENCE CALL: Parker Hannifin's conference call to discuss its fiscal second-quarter results is available to all interested parties via live webcast today at 10:30 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.
PARKER HANNIFIN CORPORATION - DECEMBER 31, 2001
CONSOLIDATED STATEMENT OF INCOME
Three Months Ended Six Months Ended
(Unaudited) December 31, December 31,
(Dollars in thousands
except per share
amounts) 2001 2000 2001 2000
Net sales $1,437,330 $1,467,619 $2,913,197 $2,952,750
Cost of sales 1,203,893 1,152,364 2,401,518 2,311,393
Gross profit 233,437 315,255 511,679 641,357
Selling, general and
administrative
expenses 164,883 169,596 330,298 332,037
Other income
(deductions):
Interest expense (21,555) (25,607) (42,009) (46,775)
Interest and other
income, net (11) 1,364 106 52,741
(21,566) (24,243) (41,903) 5,966
Income before income
taxes 46,988 121,416 139,478 315,286
Income taxes 17,926 43,102 49,835 111,926
Net income $29,062 $78,314 $89,643 $203,360
Earnings per share:
Basic earnings per
share $.25 $.68 $.78 $1.78
Diluted earnings
per share $.25 $.68 $.77 $1.77
Average shares
outstanding during
period - Basic 115,010,099 114,007,029 115,088,506 113,968,357
Average shares
outstanding during
period - Diluted 115,618,970 114,831,139 115,685,834 114,696,560
Cash dividends per
common share $.18 $.17 $.36 $.34
Note: Selling, general and administrative expenses for the three and six
months ended December 31, 2000 includes $13,854 ($11,907 after tax or $.10
per share) and $28,563 ($24,548 after tax or $.21 per share) of goodwill
amortization, respectively.
PRO FORMA RESULTS EXCLUDING GOODWILL AMORTIZATION
Three Months Ended Six Months Ended
(Unaudited) December 31, December 31,
(Dollars in thousands except per
share amounts) 2001 2000 2001 2000
Reported net income $29,062 $78,314 $89,643 $203,360
Add back goodwill amortization 11,907 24,548
Adjusted net income $29,062 $90,221 $89,643 $227,908
Earnings per share:
Reported basic earnings per share $.25 $.68 $.78 $1.78
Goodwill amortization .10 .21
Adjusted basic earnings per share $.25 $.78 $.78 $1.99
Reported diluted earnings per
share $.25 $.68 $.77 $1.77
Goodwill amortization .10 .21
Adjusted diluted earnings per
share $.25 $.78 $.77 $1.98
BUSINESS SEGMENT INFORMATION BY INDUSTRY
Three Months Ended Six Months Ended
(Unaudited) December 31, December 31,
(Dollars in thousands) 2001 2000 2001 2000
Net sales
Industrial:
North America $646,299 $738,005 $1,297,139 $1,508,110
International 290,446 313,255 586,737 621,339
Aerospace 288,312 294,425 600,812 564,813
Other 212,273 121,934 428,509 258,488
Total $1,437,330 $1,467,619 $2,913,197 $2,952,750
Segment operating income
Industrial:
North America $23,576 $95,060 $64,041 $201,999
International 8,235 21,004 28,063 45,268
Aerospace 46,446 51,097 103,338 95,373
Other 9,429 6,989 26,421 18,854
Total segment operating
income 87,686 174,150 221,863 361,494
Corporate general and
administrative expenses 15,674 20,346 32,613 37,730
Income from operations
before interest
expense and other 72,012 153,804 189,250 323,764
Interest expense 21,555 25,607 42,009 46,775
Other expense (income) 3,469 6,781 7,763 (38,297)
Income before income taxes $46,988 $121,416 $139,478 $315,286
Note: Income before income taxes for the three and six months ended
December 31, 2000 includes $13,854 ($7,251 in Industrial North America;
$2,921 in Industrial International; $1,933 in Aerospace; $1,083 in Other;
and $666 in Other expense (income)) and $28,563 ($13,942 in Industrial
North America; $5,846 in Industrial International; $3,793 in Aerospace;
$2,171 in Other; and $2,811 in Other expense (income)) of goodwill
amortization, respectively.
BUSINESS SEGMENT INFORMATION BY INDUSTRY
EXCLUDING GOODWILL AMORTIZATION
Three Months Ended Six Months Ended
(Unaudited) December 31, December 31,
(Dollars in thousands) 2001 2000 2001 2000
Net sales
Industrial:
North America $646,299 $738,005 $1,297,139 $1,508,110
International 290,446 313,255 586,737 621,339
Aerospace 288,312 294,425 600,812 564,813
Other 212,273 121,934 428,509 258,488
Total $1,437,330 $1,467,619 $2,913,197 $2,952,750
Segment operating income
Industrial:
North America $23,576 $102,311 $64,041 $215,941
International 8,235 23,925 28,063 51,114
Aerospace 46,446 53,030 103,338 99,166
Other 9,429 8,072 26,421 21,025
Total segment operating
income 87,686 187,338 221,863 387,246
Corporate general and
administrative expenses 15,674 20,346 32,613 37,730
Income from operations
before interest
expense and other 72,012 166,992 189,250 349,516
Interest expense 21,555 25,607 42,009 46,775
Other expense (income) 3,469 6,115 7,763 (41,108)
Income before income taxes $46,988 $135,270 $139,478 $343,849
Note: Amounts for the three and six months ended December 31, 2000
eliminates goodwill amortization, reflecting the Company's early adoption
of FAS 142. It is intended to assist investors in making year-over-year
comparisons with the three and six months ended December 31, 2001.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(Dollars in
thousands) December 31, 2001 2000
Assets
Current assets:
Cash and cash equivalents $28,883 $71,529
Restricted investments 92,912
Accounts receivable, net 813,638 870,510
Inventories 1,110,732 1,065,313
Prepaid expenses 43,055 36,455
Deferred income taxes 101,303 83,296
Assets held for sale 239,356
Total current assets 2,190,523 2,366,459
Plant and equipment, net 1,701,925 1,496,932
Excess cost of investments over net
assets acquired 1,074,500 847,117
Other assets 581,870 597,863
Total assets $5,548,818 $5,308,371
Liabilities and shareholders' equity
Current liabilities:
Notes payable $493,278 $540,368
Accounts payable 336,454 378,778
Accrued liabilities 449,027 403,053
Accrued domestic and foreign taxes 60,605 55,945
Total current liabilities 1,339,364 1,378,144
Long-term debt 1,063,061 981,953
Pensions and other postretirement
benefits 216,093 307,226
Deferred income taxes 145,700 104,144
Other liabilities 199,556 79,759
Shareholders' equity 2,585,044 2,457,145
Total liabilities and shareholders'
equity $5,548,818 $5,308,371
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) Six Months Ended December 31,
(Dollars in thousands) 2001 2000
Cash flows from operating
activities:
Net income $89,643 $203,360
Depreciation and amortization 122,516 133,554
Net change in receivables,
inventories, and trade payables 135,699 (47,160)
Net change in other assets and
liabilities (2,582) (76,757)
Other, net 5,060 (38,281)
Net cash provided by operating
activities 350,336 174,716
Cash flows from investing
activities:
Acquisitions (less cash acquired of
$343 in 2001 and $8,255 in 2000) (310,178) (485,235)
Capital expenditures (113,119) (169,573)
Other, net (14,176) 100,772
Net cash used in investing
activities (437,473) (554,036)
Cash flows from financing
activities:
Net (payments for) proceeds from
common share activity (4,710) 3,892
Net proceeds from debt 141,216 418,547
Dividends (41,430) (38,731)
Net cash provided by financing
activities 95,076 383,708
Effect of exchange rate changes on
cash (2,621) (1,319)
Net increase in cash and cash
equivalents 5,318 3,069
Cash and cash equivalents at
beginning of period 23,565 68,460
Cash and cash equivalents at end of
period $28,883 $71,529
SOURCE Parker Hannifin Corporation
CONTACT: Media, Lorrie Paul Crum, VP - Corp. Communications, +1-216-896-2750, or lcrum@parker.com, or Financial Analysts, Timothy K. Pistell, Treasurer, +1-216-896-2130, or tpistell@parker.com, both of Parker Hannifin
